Find the best car loan deals from SBI, HDFC, ICICI, PNB, UCO, and more. Get the best interest rates, and EMI options, and save money on your car loan.
Why Comparing Car Loan Offers is Important for Savings
The festive season is a great time to buy a new car in India, with many manufacturers launching new models. However, for most middle-class families, purchasing a car means taking out a loan. Car loans come with higher interest rates than home loans, so comparing offers from various banks is essential to find the best deal. A good loan plan can help you save a lot of money, but failing to compare rates can increase the overall cost significantly.
Let’s explore the interest rates offered by different banks on car loans and find out what will be the monthly EMI for a Rs 5 lakh loan for five years.
Interest Rates and EMI Details: Which Bank Offers the Best Deal?
When considering a car loan, looking at the interest rates, processing fees, and EMI amounts is important. Here’s a comparison of some top banks offering car loans:
| Bank Name | Interest Rate (%) | EMI for Rs 5 lakh (5 years) | Processing Fees |
| Union Bank of India | 8.70 – 10.45 | ₹10,307 – ₹10,735 | ₹1,000 |
| Punjab National Bank | 8.75 – 10.60 | ₹10,319 – ₹10,772 | 0.25% (₹1,000 – ₹1,500) |
| Bank of Baroda | 8.95 – 12.70 | ₹10,367 – ₹11,300 | Upto ₹2,000 |
| Canara Bank | 8.70 – 12.70 | ₹10,307 – ₹11,300 | 0.25% (Max ₹2,500) |
| UCO Bank | 8.45 – 10.55 | ₹10,246 – ₹10,759 | Nil |
| State Bank of India | 9.05 – 10.10 | ₹10,391 – ₹10,648 | Nil |
| ICICI Bank | 9.10 onwards | ₹10,403 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | ₹10,428 onwards | Up to 0.50% (₹3,500 – ₹8,000) |
| IDFC First Bank | 9.00 onwards | ₹10,379 onwards | Up to ₹10,000 |
Example of Monthly EMI for a Car Loan from SBI and HDFC
SBI Car Loan EMI Calculation
- Loan Amount: Rs 5 lakh
- Interest Rate: 10.10%
- Loan Tenure: 5 years
- Processing Fee: Between ₹3,500 and ₹8,000
- Monthly EMI: ₹10,648
- Total Interest in 5 years: ₹1,38,888
- Total Cost: ₹6,38,888
HDFC Bank Car Loan EMI Calculation
- Loan Amount: Rs 5 lakh
- Interest Rate: 9.20%
- Loan Tenure: 5 years
- Processing Fee: Nil
- Monthly EMI: ₹10,428
- Total Interest in 5 years: ₹1,25,667
- Total Cost: ₹6,25,667
As seen from the above calculation, HDFC Bank offers a lower EMI compared to SBI due to a lower interest rate. However, other factors like processing fees may affect the final cost.
Factors to Consider When Choosing a Car Loan
When looking for the best car loan, it’s not just about the interest rate. There are other important factors to keep in mind:
- Processing Fees: Many banks charge processing fees, which can increase the total cost of the loan. For example, while UCO Bank has no processing fee, other banks charge between ₹1,000 and ₹10,000. Check for discounts or waivers, as some banks offer concessions during the festive season.
- Down Payment Offers: Some banks promote “Zero Down Payment” options, which may seem attractive but can make the loan more expensive in the long run. Always aim to make a down payment, as this reduces the loan amount and total interest paid.
- Loan Tenure: A longer loan tenure might reduce your EMI but increase the interest paid over time. It’s better to opt for a loan tenure of 3-5 years to reduce interest payments. Avoid extending the loan term just to lower the EMI.
- Credit Score: Your credit score can significantly affect the interest rate offered. Some banks like Indian Overseas Bank offer interest concessions for high credit scores. If your credit score is 750 or above, you could be eligible for a lower interest rate, potentially saving you thousands over the loan’s tenure.
- Special Discounts: Many banks provide festive season offers, like discounted processing fees or interest rate reductions for existing customers. For example, Maharashtra Bank offers a 0.25% interest concession to its corporate salary account holders and existing home loan customers. Always inquire about these additional discounts.
Should You Modify Your Loan Amount for Car Accessories?
Once you’ve taken a car loan, it may be tempting to apply for additional financing to cover expenses like a better music system or new accessories. While some banks and NBFCs offer loans for car modifications, it’s generally not a wise decision. These loans come with higher interest rates and add to your overall debt burden. It’s better to avoid such loans unless necessary.
