When we go to the market to buy vegetables, clothes and other products, invariably we bargain with the seller, right! Similarly, when the time comes to purchase a car, you first need to bargain with the dealer to reduce the prices, and then negotiate with the lender to reduce the interest rates for a smooth car loan journey.
A difference of 2%-3% can increase or decrease the outflow from your pocket in lakhs to crores by the time when the loan tenure is over. Needless to say, higher the interest rate more it will pinch your pocket and vice-versa.
So, when you step out to buy the car of your choice, make sure you screen through the interest rates offered by various lenders and choose a one that can meet your needs without pinching your wallet. In order to help you choose a right lender, we have come up with the offers of several car financing companies in India. So, just keep your eyes firmly on the below interest rate glossary.
Types of Car Loan Interest Rates:
Car loan can be offered on floating, fixed or reducing balance basis. When it comes to a floating rate, the interest rate keeps changing with the variations in MCLR induced by the changes made in repo rate by the Reserve Bank of India (RBI). Repo rate is the rate that the RBI charges on the borrowing availed by the commercial banks in India. So, higher the repo rate, higher will be the MCLR and the effective lending rate, and vice-versa. Lending rate combines MCLR and a mark-up.
Fixed rate implies that the rate of interest remains the same over the loan tenure, leading to a fixed amount of EMI to be payable each month. Whereas, with reducing balance, the principal amount keeps changing the payment of EMIs. The reducing balance mechanism can be either daily, monthly or yearly.
Car Loan Interest Rate Comparison:
State Bank of India (SBI)- 9.60%-9.65% p.a. (Floating) (New Cars)
- 13.05% p.a. (Floating) (Old Cars)
ICICI Bank- 10.75%-12.75% p.a. (New Cars)
- 15.50% p.a. (Old Cars)
HDFC Bank- 9.25%-11.25% p.a. (Monthly Reducing Balance) (New Cars)
- 14.50%-17.50% p.a. (Monthly Reducing Balance) (Old Cars)
Axis Bank- 9.50%-15% p.a. (Monthly Reducing Balance) (New Cars)
- 14.50%-16.25% p.a. (Monthly Reducing Balance) (Old Cars)
Kotak Mahindra Bank- 11.50%-13.50% p.a. (Floating) (New cars)
- 15%-21% p.a. (Floating) (Old Cars)
Bank of Baroda (BoB)- 9.75% p.a. (Floating) (New Cars)
- N.A.
Bank of India (BOI)- 9.40% p.a. (Floating) (New Cars)
- 9.50% p.a. (Floating) (Old Cars)
Punjab National Bank (PNB)- 9.60%-9.85% p.a. (Floating) (New Cars)
- 9.90% p.a. (Floating) (Old Cars)
Yes Bank- 10.25%-12.25% p.a. (New Cars)
- As Applicable by the Bank (Old Cars)
IndusInd Bank- 10.90% p.a. (Fixed) (New Cars)
- 14%-21% p.a. (Fixed) (Old Cars)
Indian Overseas Bank (IOB)- 10.40% p.a. (Floating) (New Cars)
- As Applicable by the Bank (Old Cars)
Corporation Bank- 9.90%-10.65% p.a. (Floating) (New Cars)
- As Applicable by the Bank (Old Cars)
Syndicate Bank- 10.10% p.a. (Floating) (New Cars)
- 10.10% p.a. (Floating) (Old Cars)
IDBI Bank- 9.95% p.a. (Floating) (New Cars)
- As Applicable by the Bank (Old Cars)
Oriental Bank of Commerce (OBC)- 9.95% p.a. (Floating) (New Cars)
- 12.70% p.a. (Floating) (Old Cars)
Car Loan Interest Rate Calculator
You can also use the car loan interest rate calculator to figure out the EMIs you need to pay towards a loan. Equated monthly installments (EMIs) are a combination of both principal and interest payable on a car loan. In addition to the EMIs, you can also get to know the overall interest repayment over the loan tenure using the calculator.
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