This will reduce your interest cost over the tenure of the loan. It will also allow you to opt for a lower tenure or lower EMI, suggests Sanjay Kumar Singh.
Photograph: Kind courtesy Todd Lappin/Creative Commons
Try to limit the loan to an amount such that the EMI does not exceed 15-20 per cent of your take-home salary.
Remember that you would have other loans also and the EMIs of all of them should together not exceed 50 per cent of your take-home salary.
The car loans available within the dealer's premises may not be the most attractive.
Scout around for better deals on your own despite pressure from the dealer to take a loan from one of his lender partners.
Many public sector banks offer attractive interest rates (see table below) starting at below 9 per cent.
Pay the maximum down payment you can afford.
This will reduce your interest cost over the tenure of the loan.
It will also allow you to opt for a lower tenure or lower EMI.
Use online tools to compare car loan rates.
Keep in mind the foreclosure charge.
If it is high, you will have difficulty in closing your loan early.
Business owners can deduct the interest paid on a car loan when filing their tax returns.
Salaried people do not enjoy this benefit.
Sometimes, you can get a better deal if you approach a bank towards the end of the month, when they have their monthly target to meet.
| Rates and charges: Car loan |
| Oriental Bank of Commerce |
| Interest rate (%) |
9.05 - 9.15 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,391 - 10,415 |
| Processing fee (Rs) |
500 - 7,000 |
| Financing |
Upto 85%** |
| Maximum Tenure |
10 years |
| |
|
| State Bank of India |
| Interest rate (%) |
9.15 - 12.50 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,415 - 11,248 |
| Processing fee (Rs) |
500 - 3,750 |
| Financing |
Upto 90%** (Upto 100% under specific schemes) |
| Maximum Tenure |
7 years |
| |
|
| Axis Bank |
| Interest rate (%) |
9.05 - 11.30 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,391 - 10,946 |
| Processing fee (Rs) |
3,500 - 5,500 |
| Financing |
Upto 100% ** |
| Maximum Tenure |
8 years |
| |
|
| HDFC Bank |
| Interest rate (%) |
9.65 - 10.6 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,537 - 10,771 |
| Processing fee (Rs) |
3,000 - 10,000 |
| Financing |
Upto 100% ** |
| Maximum Tenure |
7 years |
| |
|
| Bank of India |
| Interest rate (%) |
9.20 - 9.60 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,427 - 10,525 |
| Processing fee (Rs) |
500 |
| Financing |
For amount upto 10 lacs : 100% on ex-showroom price ' For amount above 10 lacs : Up to 85%** |
| Maximum Tenure |
7 years |
| |
|
| Punjab National Bank |
| Interest rate (%) |
8.9 - 9.35 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,354 - 10,464 |
| Processing fee (Rs) |
Upto 1,500 |
| Financing |
Upto 90%** |
| Maximum Tenure |
7 years |
| |
|
| United Bank of India |
| Interest rate (%) |
8.95 - 9.75 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,367 - 10,562 |
| Processing fee (Rs) |
600 - 11,800 |
| Financing |
Upto 85%** |
| Maximum Tenure |
6 years |
| |
|
| Allahabad Bank |
| Interest rate (%) |
8.8 - 11.05 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,330 - 10,883 |
| Processing fee (Rs) |
Upto 8,696 |
| Financing |
Upto 85%** |
| Maximum Tenure |
7 years |
| |
|
| Canara Bank |
| Interest rate (%) |
8.9 - 9.55 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,354 - 10,513 |
| Processing fee (Rs) |
1,000 - 5,000 |
| Financing |
Upto 90%** |
| Maximum Tenure |
7 years |
| |
|
| UCO Bank |
| Interest rate (%) |
8.8 - 9.05 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,330 - 10,391 |
| Processing fee (Rs) |
Upto 1,500 |
| Financing |
Upto 85%** |
| Maximum Tenure |
7 years |
| |
|
| Indian Overseas Bank |
| Interest rate (%) |
9.15 |
| EMI (Rs) Loan amount - 5 lakh ' Tenure - 5 years |
10,415 |
| Processing fee (Rs) |
500 - 10,000 |
| Financing |
Upto 90% of vehicle's cost |
| Maximum Tenure |
7 years |
| **Percentage of vehicle's on-road price |
| Source: Paisabazaar.com |
