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Car Loan Interest Rate List

Created on 24 Feb 2023

Wraps up in 8 Min

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Updated on 24 Mar 2023

Everyone wants to get a car once they start earning money, right?

Because we all want to level up our standard of living to give ourselves a sense of self-assurance. So as soon as possible, we begin searching for cars that meet our demands and satisfy our sense of style. I was browsing the internet one day with my dad looking for a family-friendly car when I stumbled onto a quote by American actress Alexandra Paul that really struck a chord…

“The cars we drive say a lot about us.”

At this point, however, a number of questions begin to pop into our heads, the most crucial of which was “How will we pay for it if we don't have enough savings.” The next thing we do is decide to apply for a bank loan, which prompts a massive question in our minds “Which bank is the best? How much are the interest fees?” And perhaps most importantly, “Which bank is best for me?”

And whenever we visit the bank for a loan we hear the word CIBIL score often.

CIBIL score will be one of the biggest factors and this is the key component for a loan because the bank or the lender will determine your eligibility and the interest rate of the loan based on your credit score.

But CIBIL score is a lot more than just a number.

What is CIBIL Score ?

So, The CIBIL Score, which varies from 300 to 900, is a three-digit numerical summary of your credit history, rating, and report. Your credit rating improves when your score approaches 900.

Of the four credit information firms granted a license by the Reserve Bank of India, The Credit Information Bureau (India) Ltd (CIBIL) is the most well-known. Three further businesses have been granted licenses by the RBI to operate as credit information companies. Experian, Equifax, and Highmark are the three.

While having a good CIBIL rating makes it possible for you to get a loan with a lower interest rate, having a low credit score might lead you to higher interest rates and, in some circumstances, loan denial as well. So as soon as you decide to get a car loan then check your credit report right away to determine whether you qualify for it or not.

Car Loan Interest Rates

On the other hand, the interest rates for car loans might be either fixed or variable. For the duration of the loan, the interest rate on a fixed loan doesn't change. A floating rate refers to a rate that adjusts in response to changes in either the base rate or the lender's Marginal Cost of Lending Rate (MCLR).

After we have an understanding of the primary criteria, let's look at what the interest rates of the biggest banks in our nation are. 

Interest rates of Different banks in India

The interest rates provided on car loans varies among banks. Certain banks also provide special rates and loans for the purchase of electric vehicles. Here’s a list of popular banks and the interest rates charged by them:

1. State Bank of India:
So, one of the most trusted banks of our nation offers car loans at the standardized rate from 8.65% to 9.45% for new cars. For second hand cars, the interest rate ranges between 11.25% to 14.75%. However, it will vary depending on factors like your credit score. For example if your credit score is more than 775 and your loan repayment period ranges between 3-5 years, then your rate of interest will be near 8.65%, but if your repayment period is more than 5 years, then the standard rate of interest would be 8.75%.

The repayment period for SBI car loan is from 3 years to 8 years. If you are regular working employee, then your maximum loan amount can be 48 times of your net monthly income. For businesspeople or a self employed people, the maximum loan amount can be 4 times of your Net Profit or Gross Taxable income as per ITR after adding back depreciation and repayment of all existing loans.

An individual engaged in agricultural activities can generate a car loan which is equal to 3 times his net annual income. When it comes to Electric vehicles, everything remains the same except the standard interest rates as it ranges between 8.60% to 9.40%, and the rates variable according to the credit score of the applicant. 

2. HDFC Bank:
When it comes to HDFC, they offer car loans at a standard interest rate of 7.95% to 8.30% for brand new automobiles. For used cars, the interest rate ranges between 7.25% to 15.05%, and for EV’s, there interest rates starts at 8.75%. Again, these interest rates will be either minimized or maximized based on your credit score.

Nonetheless, HDFC usually prefers customers who have a credit score of more than 650. Salaried individuals or self employed people who earn more than ₹3,00,000 p.a. can apply for a car loan at HDFC. But salaried individuals must be working for at least two years and associated with their current employer for a minimum of one year at least. Even self-employed individuals must have a business that has been operational for at least two years. Moreover, HDFC has a flexible payment tenure between 1 year to 7 years. 

3. ICICI Bank
The maximum interest rate charged by ICICI Bank depends on your credit score and starts at 8% for new cars. Yet, the interest rate for used cars ranges from 12% to 13%. The loan term for a new car is up to 7 years, while the loan payback term for a used car is up to 5 years.

The eligibility requirements are that salaried individuals must have a gross yearly salary of at least ₹2.50 lakh, as well as total and current employment stability of at least two years each, and the self-employed must earn at least ₹2.00 lakh in gross annual revenue. A business should have stability for at least three years.

4. Axis Bank
In Axis bank, when it comes to auto loans, the eligibility criteria are same for new and used cars. Hence, if the loan term is up to or exceeds 36 months, Axis Bank offers auto loans at an interest rate ranging from 8.80% to 13.05%, and the interest rates for EV’s in Axis Bank is 7.35% p.a. Proceeding to the income criteria, a salaried person must earn a minimum net annual salary of ₹2,40,000 per year and have a minimum of one year of continuous employment. In contrast, businessmen must have a minimum net annual business income of ₹1,80,000 for some models and ₹2,00,000 for others, as well as a minimum of three years' experience working in the same industry.

The maximum tenure for a new car is 7 years, and the same for a used car is 5 years.

5. Punjab National Bank
With PNB, your CIBIL score is a crucial component in determining your interest rate. If it is better than 750, and you are purchasing a new vehicle, you will be charged an interest rate of 8.95%. If it is less than 700, the interest rate can range from 9.40% to 9.75%. But, if you are buying a used car, your interest rate would range from 9.95% to 10.40% against a credit score of 750. Moreover, the financing rates for EVs might range from 8.90% to 9.70% based on the same CIBIL scores.

Both salaried and self-employed individuals must have a minimum net monthly income of ₹25,000. However, it is vital to note that no minimum monthly income is necessary when the borrower agrees to provide 110% of liquid security in the form of a term deposit.

6. Bank of Baroda
BOB is India's second-largest public sector bank. At BOB, the EMI amount determines the car loan's payback length or tenure, which can last up to 84 months. Based on the applicant's credit score or CIBIL Bureau score, the interest rate for auto loans is computed daily on a falling balance. The loan requires a minimum credit score of 701 to be approved. But the standard interest rate for new cars ranges between 8.70% to 12.15%. For pre owned, the interest rate varies between 11.90% to 14.45% .

Both salary salaried individuals and business owners are eligible to apply for a car loan at BOB, but the requirements for each are different. For example, if a salaried professional's gross monthly salary is less than ₹50,000, they can finance 60% of their car loan. However, if their gross monthly salary is between ₹50,000 and ₹1,50,000, they can finance up to 70% of their loan. However, business owners can finance up to 80% of their car loan if their average annual income over the last two years has exceeded ₹6 lacs. If their average annual income over the past two years has been less than ₹6 lacs, they can finance up to 60% of the loan amount.

7. Canara Bank
When it comes to auto loans, one can turn to Canara Bank, one of the public sector banks in India.Canara Bank offers loans for brand new cars at interest rates ranging from 9.25% to 11.95%. The same interest rate also applies to used cars and EVs. However, they do not offer loans for used cars older than three years.

New automobiles have a 7-year repayment period, whereas used cars have a 5-year repayment period. If you want to apply for a car loan, the annual minimum gross pay for salaried people should be ₹3.00 lakh. The minimum NTH following the planned installment must be at least 25%, or ₹12,000—whichever is higher. Other than salaried people, you need to make at least ₹3 lakh per year in gross income.

8. Kotak Mahindra Bank
Depending on the applicant's profile, the product category, the interest gradation method used by KMPL, and other factors, interest rates on auto loans can range from 7.70% p.a. to 25% p.a. Credit is given solely at KMPL's (Kotak Mahindra Prime Limited) discretion. If a person receives a salary or owns a business, they must meet the same requirements at Kotak Mahindra Bank and have a minimum of ₹15,000 in monthly income to be eligible to apply for a loan. Nevertheless, both must have a minimum of one year of stable revenue.

Kotak Mahindra Bank is quite flexible for car loans as compared to other banks as it doesn’t demand high income criteria, so if you have a low credit score, then Kotak Mahindra Bank can be your go to place for the same.

9. Union Bank of India
The applicant's specific interest rate will be determined by the applicant's credit score at UBI, just like at other banks. But, to give you a general idea, if you are a salaried or self-employed person and your credit score is over 750, your interest rate will be between 8.85% and 8.95%. Meanwhile, if your score is between 700 and 600, your rate will be between 10.00% and 10.50%. If your credit score is above 700, the interest rate for green cars will range from 9.80% to 9.05%. But, if your credit score is below 650, your interest rate will likely decrease between 10.30% and 10.90%.

The Bottom Line

Today, the first thing we consider is where should I apply for a car loan and which bank offers the best car loan, but the reality is not the best bank, but the price and the kind of car you wish to buy should be your determining factors when choosing a car loan. Depending on the cost and classification of the vehicle you wish to purchase, different loans may be available to you. Also, it depends on your  important USP (Unique Selling Point), which the borrower is looking for.

But, the interest rate and length of the loan that will be provided to you are heavily influenced by your creditworthiness, which is indicated by your CIBIL score. The choice of an appropriate vehicle loan programme for you depends on a wide range of factors.

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Shreni Sharma

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Shreni is pursuing PGPM at ICFAI Business School Pune. Shreni is a sports fanatic, loves to read, an avid Potterhead, and most importantly, a finance enthusiast. She wants to explore every aspect of life to the fullest and push herself every day to achieve her best self. 

 

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