Check which lenders offer best interest rates on new car loans
MUMBAI: While purchasing a new car, the dealer is likely to ask if you need a loan. In case you do, they will direct you to a loan desk where different lenders offer loans.
Most buyers end up taking a car loan from a lender which has partnered with the dealer as it’s convenient that all services are available under one roof. However, before you sign up for the loan with the lender who has partnered with the dealer, check if you can get a cheaper rate elsewhere.
Even a 1% difference in the interest rate can help you save. Suppose you want a ₹7 lakh loan, the dealer offers it at 8% for five years. Your equated monthly instalment (EMI) will work out to be ₹14,194 and the total outgo will be ₹8,51,609.
If your loan is 0.5% cheaper, your EMI will be ₹14,027 and the total loan outgo will be ₹8,41,594.
If the loan is 1% cheaper, the EMI and total loan outgo will be ₹13,861 and ₹8,31,650, respectively.
Other than interest rates, the processing fee added to the total outgo can make a more significant difference.
Public sector banks (PSBs) are generally cheaper than private-sector lenders in several loan categories. At present, the lowest interest rate offered by Bank of Baroda offers is 7%, Union Bank of India at 7.15%, Canara Bank at 7.3%, according to data from Paisabazaar.com. The lowest rate that State Bank of India offers is 7.5%.
In private banks, ICICI Bank and HDFC Bank offer 7.9% and 7.95%, respectively, as their lowest rates.
Some of the banks that offer lower processing fees include Union Bank of India ( ₹1,000), IDBI Bank ( ₹2,500), and Federal Bank ( ₹1,500 – 2,500).
Hence, when you evaluate loan offers, consider interest rates along with other charges.
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