After a hectic day, travelling by public transport or waiting for cabs can be quite tiring. Owning a vehicle can be a liberating solution to this problem. If you have the budget for it, a car would make for a much safer option over a two-wheeler, especially considering the two-wheeler accident statistics in India. Having a car of your own gives you unparalleled convenience and freedom to travel on your terms, without having to rely on public transport or cab hailing services. Be it travelling to work, a quick run to get groceries, picking up kids from school, or even a weekend getaway, you have the freedom to do so in the comfort of your vehicle surrounded by your loved ones.
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There are many avenues which you can explore to finance your vehicle purchase. These include options such as car loans, personal loans, and other types of secured loan products such as loans against property or a gold loan. However, car loans may be the most suitable option that can help make your vehicle purchase affordable. The reason behind this is that a car loan, being a secured loan, is often available at far more competitive rates as compared to unsecured loans such as personal loans.
If you are in the market for a car loan, there are certain key points you must remember. Car loans will only provide a percentage of the cost of the car you wish to purchase. Most lenders provide up to 85% of the vehicle’s ‘on road’ price and the remaining amount must be borne by the borrower. These loans typically come with a repayment tenure of up to seven years.
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When assessing your car loan application, lenders consider multiple factors. One of the primary factors is your credit score which helps lenders assess their risk in lending to you and also determine the interest rate to offer to you. As part of the loan process, you, the borrower, will also have to bear the loan processing fee, charged as per the lender’s policy. This fee is usually a set percentage of the loan amount but may vary from bank to bank.
If you’re already servicing a home loan, approach your existing lender and check for concessional interest rates on car loans. Some lenders also offer pre-approved car loans to select or long-standing customers, who can benefit from not just preferential interest rates but also quick loan disbursals.
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To make your scouting easier, here are 10 banks currently offering the lowest interest rates on car loans.
| Bank Name | Lowest advertised car loan interest rate | EMI |
| UCO Bank | 8.70% | ₹ 15,937 |
| Bank of Maharashtra | 8.70% | ₹ 15,937 |
| State Bank of India | 8.75% | ₹ 15,962 |
| IDBI Bank | 8.75% | ₹ 15,962 |
| Bank of Baroda | 8.75% | ₹ 15,962 |
| South India Bank | 8.75% | ₹ 15,962 |
| Punjab National Bank | 8.80% | ₹ 15,988 |
| HDFC Bank | 8.85% | ₹ 16,013 |
| Bank Of India | 8.85% | ₹ 16,013 |
| Union Bank | 8.85% | ₹ 16,013 |
Do note, we have only considered the lowest advertised interest rates for each of the lenders mentioned in the table, and the interest rate applicable to you could be higher depending on your loan amount, credit score, type of occupation or any other terms and conditions of your chosen lender.
Disclaimer: Interest rates on used car loans for all listed (BSE) public and private banks have been considered for data compilation (Excluding small finance banks). Banks for which data is unavailable on their website have not been considered. Data was collected from the respective bank’s websites on Oct 3, 2023. Banks are listed in ascending order based on the lowest advertised interest rate on used car loans. Banks’ lowest interest rates are shown in the table (irrespective of the loan amount or tenure). EMI is calculated based on the Interest rate mentioned in the table for a Rs. 7 lakh loan with a tenure of 3 years (processing and other charges are assumed to be zero for EMI calculation). The interest mentioned in the table is indicative, and it may vary depending on the bank’s terms and condition. *Rack Interest rate
