Buying a car is a goal for some individuals while it is a necessity for others. Regardless of the circumstances, purchasing a car represents a significant financial commitment that can deplete your savings or require a car loan.
Typically, car loans offer lower interest rates compared to unsecured loans, such as personal loans. When exploring options for a car loan, it is essential to compare various offerings from different financial institutions. Certain lenders may have exclusive partnerships with dealerships, which can result in expedited processing and reduced rates.
Additionally, some lenders provide pre-approved car loans to select customers or offer preferential rates to those who are existing home loan borrowers. Thus, to secure the most advantageous deal, it is crucial to evaluate the car loan options available from multiple lenders.
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It is important to note that the interest rates applicable to car loans are determined by considering your credit score and income. Many banks have aligned their lending rates with credit scores. A credit score of 750 or higher can enable you to obtain a loan at more favorable interest rates, while a low credit score may either disqualify you from receiving a car loan or force you to accept a loan with a higher interest rate. Therefore, prior to applying for a car loan, it is advisable to review your credit reports.
It is important to recognize that you will need to cover a portion of the costs yourself. Typically, lenders finance only 80% to 90% of the vehicle’s on-road price. While certain banks may offer financing for up to 100% of the car’s valuation, this is contingent upon specific terms and conditions and is not guaranteed.
Generally, lending institutions provide loans with tenors extending up to 7 years. In addition to interest rates, it is advisable to inquire about other fees, such as processing fees and repayment charges, which can differ based on the lender’s policies. For those considering a car loan, the following table lists both public and private sector banks that are currently offering some of the most competitive car loan interest rates available in the country. It also includes the indicative EMI for a new car loan of Rs 5 lakh over a tenure of 5 years.
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