The festive season is the perfect time for many to buy a new car, thanks to discounts and special deals offered by car manufacturers and banks. If you’re planning to make a purchase, you’ll want to take advantage of the best car loan interest rates available. Several banks offer special festive deals, which include lower interest rates, reduced or waived processing fees, and attractive loan amounts covering up to 100% of the car’s value.
To make sure you’re getting the best deal, it’s important to compare the car loan rates offered by different banks. This can help reduce your monthly EMI burden and potentially save you money.
How Car Loan Interest Rates Are Determined
When banks decide on the interest rates for car loans, they take several factors into account. These include:
- RBI repo rate: This is the rate at which banks borrow money from the RBI, and it influences the interest rates offered to customers.
- Credit score: A higher credit score, usually above 750, means you are considered a lower risk to the bank. This can result in a lower interest rate on your car loan.
- Income and existing loans: Your monthly income, the value of the car, the loan amount, and the tenure of the loan all play a role in determining the final interest rate.
Festive Season Car Loan Offers from Banks
During the festive season, banks come up with special offers for car buyers. These offers may include lower interest rates, no processing fees, 100% financing, and other benefits. Here’s a look at some of the car loan interest rates offered by major banks:
| Bank | Interest Rate (%) | EMI for Rs. 5 Lakh (5 Years) | Processing Fee |
| Union Bank of India | 8.70 – 10.45 | Rs. 10,307 – Rs. 10,735 | Nil |
| Punjab National Bank | 8.75 – 10.60 | Rs. 10,319 – Rs. 10,772 | 0.25% (Rs. 1,000 – Rs. 1,500) |
| Bank of Baroda | 8.95 – 12.70 | Rs. 10,367 – Rs. 11,300 | Up to Rs. 750 |
| Canara Bank | 8.70 – 12.70 | Rs. 10,307 – Rs. 11,300 | Nil |
| Bank of India | 8.85 – 12.10 | Rs. 10,343 – Rs. 11,148 | 0.25% (Rs. 1,000 – Rs. 5,000) |
| UCO Bank | 8.45 – 10.55 | Rs. 10,246 – Rs. 10,759 | Nil |
| State Bank of India | 9.05 – 10.10 | Rs. 10,391 – Rs. 10,648 | Nil |
| IDBI Bank | 8.80 – 9.65 | Rs. 10,331 – Rs. 10,294 | Rs. 2,500 |
| Bank of Maharashtra | 8.70 – 13.00 | Rs. 10,307 – Rs. 11,377 | Nil |
| Indian Overseas Bank | 8.85 – 12.00 | Rs. 10,343 – Rs. 11,122 | 0.50% (Rs. 500 – Rs. 5,000) |
| ICICI Bank | 9.10 onwards | Rs. 10,403 onwards | Up to 2% |
| HDFC Bank | 9.20 onwards | Rs. 10,428 onwards | Up to 1% (Rs. 3,500 – Rs. 9,000) |
| Karnataka Bank | 8.88 – 11.37 | Rs. 10,350 – Rs. 10,964 | 0.60% (Rs. 3,000 – Rs. 11,000) |
| Federal Bank | 8.85 onwards | Rs. 10,343 onwards | Rs. 2,000 – Rs. 4,500 |
| Punjab and Sind Bank | 8.85 – 10.25 | Rs. 10,343 – Rs. 10,685 | 0.25% (Rs. 1,000 – Rs. 15,000) |
| South Indian Bank | 8.75 onwards | Rs. 10,319 onwards | 0.75% (Max Rs. 10,000) |
| IDFC First Bank | 9.60 onwards | Rs. 10,525 onwards | Up to Rs. 10,000 |
| City Union Bank | 9.90 – 11.50 | Rs. 10,599 – Rs. 10,996 | 1.25% (Min Rs. 1,000) |
Credit Score: The Key to a Lower Interest Rate
Your credit score plays a crucial role in determining the interest rate you are offered on your car loan. While some banks do not specify a minimum score, a credit score of 750 or above is generally considered ideal. This gives you access to lower interest rates and better loan terms.
If your credit score is lower than 750, you may still be able to get a loan, but the interest rate is likely to be higher, and the loan amount may be less than you anticipated.
Important Factors to Consider Before Taking a Car Loan
- Check Your Credit Score: A good credit score can help you get a loan at a lower interest rate, which will save you money throughout the loan.
- Compare Interest Rates: During the festive season, banks offer competitive rates. Compare the interest rates of multiple banks to find the best deal.
- Processing Fees and Other Charges: Banks may offer lower interest rates but charge higher processing fees or other hidden charges. Be sure to ask about these costs upfront to avoid any surprises.
- Loan Tenure and EMI: Consider the tenure of the loan carefully. While a longer tenure may reduce your EMI, it will also increase the total interest paid. Use a car loan EMI calculator to figure out a comfortable EMI amount that fits within your monthly budget.
How to Make the Most of Festive Season Offers
The festive season is the best time to buy a car as you can take advantage of special offers from both car manufacturers and banks. To maximize your savings:
- Look for discounts offered by car dealerships.
- Check for waived or reduced processing fees from banks.
- If possible, aim for zero down payment or 100% financing options to ease the financial burden upfront.
By planning well and comparing all your options, you can make your car purchase more affordable and manage your budget efficiently during this festive season.
