If you are planning to buy a car or a motorcycle, the chances are that you would not want to disrupt your financial planning by withdrawing a huge sum out of your bank. Alternatively, you may not even have access to a huge disposable money to be able to buy a vehicle right away.
In such a scenario, a car loan comes handy for you. For this, you need to compare the rates of interest offered by different banks. Here we list out the rates offered by different commercial banks – both in the public and the private sector.
Rates of interest charged by banks on car loans
ICICI Bank: The private lender charges an interest of 10 percent onwards based on the applicant’s credit score and car segment if the loan tenure is between 12-35 months.
On the other hand, when the tenure is between 36-96 months, the rate of interest is 8.90 percent onwards based on the credit score of the applicant. At the same time, the banks charge an interest higher than 11.25 percent on the used cars.
|Bank||Minimum rate of interest|
|Kotak Mahindra Bank||7.7%|
|Bank of Baroda||8.75%|
(Source: Banks’ official websites)
HDFC Bank: This bank charges IRR (internal rate of return) between 8.30 percent to 11 percent on auto loans. Flexible repayment tenures range between 12 months to 84 months. The bank offers zero foreclosure after a period of 24 months.
State Bank of India (SBI): The largest state lender charges 8.8 percent to 9.7 percent for car loans based on the credit score. On electric cars, the bank charges 8.65 to 9.35 percent per annum.
Kotak Mahindra Bank: The private lender charges anywhere between 7.70 percent to 25 percent depending on the profile of applicant, profile of applicant, product segment, etc. The loan tenure could be anywhere between one to seven years.
The prepayment interest on principal outstanding the bank charges is 5.21 percent plus taxes. The car loan offer is from Kotak Mahindra Prime, a subsidiary of Kotak Mahindra Bank.
Bank of Baroda: The bank offers up to 90 percent of financing. The bank charges a fixed rate of interest to the tune of 8.75 percent to 11.20 percent.
On the other hand, the bank charges a floating rate of 8.85 percent to 12.15 percent. The bank also charges processing charges up to ₹1,500 on loans up to ₹10 lakh.