Check which lenders offer the best interest rates on new car loans
MUMBAI: When you negotiate the price of a car, the dealer has to ask you if you want a loan? If you do, the dealer representative will take you to the loan office, where you can usually get a loan from two to three different lenders.
Most buyers end up getting a car loan from a lender that has partnered with the dealership. It is convenient that all the services a buyer is looking for are available under one roof. However, before taking out the loan from the lender who has partnered with the dealership, check to see if you can get a cheaper rate elsewhere.
Even a 1% difference on the loan can help you save. Suppose you want a ₹7 lakh ready. The dealer is offering it at 8% for five years. Your equivalent monthly installment (EMI) will turn out to be ₹14,194, and the total expenditure will be ₹8,51,609.
If your loan is 0.5% cheaper, your EMI will be ₹14,027, and the total amount of the loan will be ₹8,41,594.
If the loan is 1% cheaper, the EMI and the total loan amount will be ₹13,861 and ₹8,31,650, respectively.
Interest rates are one part; the processing fee added to the total expenses can make a bigger difference.
Public sector banks (PSBs) are generally cheaper than private sector lenders, as in many other loan categories. At present, Punjab & Sind Bank offers the lowest rate at 6.8%, Bank of Baroda at 7%, Union Bank of India at 7.15%, Canara Bank at 7.3%, according to the data. from Paisabazaar.com. The lowest rate offered by the State Bank of India is 7.5%.
In private banks, ICICI Bank and HDFC Bank offer 7.9% and 7.95% respectively as the lowest rates.
Some of the banks that offer lower processing fees include Union Bank of India ( ₹1,000), IDBI Bank ( ₹2,500) and the Federal Bank ( ₹1,500 – 2,500).
Therefore, when evaluating loan offers, consider interest rates as well as other fees.