Best Bank For Car Loan In India

The experience of buying the car of your dreams can be exhilarating, but for the vast majority of us, it’s also a huge financial commitment. After that, we made the decision to seek a car loan. You can borrow money to purchase a car with the help of a special kind of secured loan known as an auto loan. Because the automobile itself serves as collateral for the loan, the creditor has the legal right to take possession of it if you are unable to keep up with your monthly payments. There is a wide selection of financial institutions, including banks, credit unions, and online lenders, that offer auto loans to consumers.

But how can you know which bank is the ideal one to entrust with the responsibility of your auto loan?

In the next posts, we will discuss the top 12 banks for auto loans, as well as the interest rates, eligibility requirements, and required paperwork for auto loans. In addition to this, we will go over the many types of auto loans, how to compute the interest rates on your auto loan, and a lot more!

This guide will be of tremendous assistance to first-time buyers as well as those who are interested in upgrading their current vehicle.

Top 12 Banks for Car Loans in India

The following is a list of banks that provide a variety of products for auto loans, including competitive interest rates and flexible terms for repayment. Borrowers will have an easier time accessing their services thanks to the extensive branch and automated teller machine network that they maintain across India.

State Bank of India Car Loan

Car loans are available from SBI Bank at exceptionally low interest rates, which are determined by how much you continue to owe on a daily basis. There are a total of four distinct auto loans available through SBI: the SBI New Car Loan, the SBI Loyalty Car Loan, the SBI Assured Car Loan, and the SBI Green Car Loan.

You may be eligible for a loan for up to 90 percent of the overall cost of the vehicle, which takes into account items such as registration, accessories, insurance, warranty, and maintenance. In addition, if you finance your vehicle with SBI, you have the option of purchasing life insurance at the same time.

Bank of Baroda Car Loan

A car loan from Bank of Baroda can assist you in purchasing a regular car, an SUV, or a large car for your own personal use. People who have good credit scores are eligible for interest rates that are lower. On a daily basis, the interest rates are computed based on the amount that is still outstanding. If you are timely with the repayment of the loan, the bank will not impose any additional fees on you.

Union Bank of India Car Loan

You have the option of purchasing either a brand-new or slightly used vehicle when you apply for a car loan through Union Bank of India (up to 3 years old). This loan is available not only to individuals, but also to businesses and organisations, which can use it to purchase automobiles for their staff members. You are required to make a down payment equal to at least ten percent of the car’s total price before you can get this auto loan.

If you want to pay off the loan early using your own money, there are no additional fees or penalties that you will have to pay. Your ability to manage your car loan will be simplified as a result of this change.

HDFC Bank Car Loan

When you go with an HDFC Bank car loan, you are given a loan that is tailored specifically to your needs. They simplify the process of paying it back by providing options such as step-up EMI and balloon EMI. If you already have a loan with them for your vehicle, you can get additional money without having to provide any additional paperwork.

Federal Bank Car Loan

The Federal Bank offers a car loan that comes with a number of nifty features. To begin, there won’t be any additional fees charged to you in the event that you choose to repay the loan ahead of schedule. In addition to that, they will provide you with free personal accident insurance that will cover you for up to Rs. 10 lakh.

They are able to provide you with a loan for up to the total amount of the price of the car minus the showroom markup if you require assistance covering the entire cost of the vehicle. Additionally, if you have any costs related to the car within a month of purchasing it, they will reimburse you for those costs.

Axis Bank Car Loan

The Axis Bank Car Loan is constructed with individualised features that are tailored to meet the requirements of each individual customer. When you apply for a car loan with Axis Bank, you may be eligible for additional privileges and perks if you are a Priority, Privee, or Wealth Banking customer of the bank. Because this loan is available to individuals in addition to businesses, it can accommodate a diverse group of people who are in need of financial assistance.

In addition, if you are a pre-approved customer or have a salary account with the bank, you may not be required to submit documents verifying your income or bank statements. This makes the application process simpler and more convenient.

Canara Bank Car Loan

Canara Vehicle is the name of the auto loan programme that Canara Bank provides; this programme can be utilised for the purchase of either new or pre-owned vehicles. You are able to receive a car loan from Canara Bank for up to 90 percent of the total cost of the vehicle. This takes into account not only the cost of the vehicle itself but also additional costs such as taxes, registration fees, and insurance premiums.

Your down payment will be a certain percentage of the total loan amount, and the exact amount will be determined by the price of the vehicle. 10% for automobiles valued up to Rs. 10 lahks, 15% for automobiles valued between Rs. 10 lahks and Rs. 25 lahks, and 20% for automobiles valued at more than Rs. 25 lahks.

Canara Bank extends credit for automobile purchases to a variety of individuals and working professionals, but they do not work with Hindu Undivided Families for this particular loan (HUFs).

IDBI Bank Car Loan

A variety of automobiles and SUVs can be purchased with the assistance of a car loan from IDBI Bank. They have close relationships with both car dealers and the manufacturers to ensure that you get the best deals possible. You can simplify the process of paying your EMIs by setting up standing instructions or using ECS. In addition, as long as you use your own money to pay off the loan, you won’t be subject to any penalties if you choose to make partial payments or pay it off in full after the first six months has passed.

Punjab National Bank Car Loan

The Punjab National Bank (PNB) makes it simple to obtain a loan for a vehicle. They collaborate with some of the most reputable automobile manufacturers in the world, including Tata Motors, Honda Cars India, Maruti Suzuki India, Mahindra & Mahindra, and Force Motors Ltd. This indicates that you will be able to get amazing deals on the auto loan you get through them. It is not only for individuals, but also for companies that have employees who require a car for personal use.

On your automobile loan, PNB offers you the flexibility to select either a fixed or a variable interest rate structure. When applying for a car loan from PNB, you will typically be required to provide either some form of collateral or a guarantee from a third party. However, depending on how trustworthy you are, they may exempt you from this prerequisite in certain circumstances.

If you work for the government, you may be eligible for the “PNB Pride Car Loan,” which is a unique type of auto loan designed specifically for people in your position. Therefore, no matter who you are or what you’re looking for in a car loan, PNB has options that will work for you.

Karnataka Bank XPress Car Loan

The Karnataka Bank XPress Car Loan offers a number of beneficial features to its customers. You are eligible for this loan if you are either an agriculturist or a person who owns land suitable for agricultural use. The application process is open to Non-Resident Indians (NRIs), as well. You have the option of borrowing up to 85 percent of the car’s on-road price, regardless of whether the vehicle is brand new or used. This indicates that it is adaptable and can satisfy a variety of requirements regarding the purchase of a car.

Kotak Mahindra Bank Car Loan

People in need of a car loan in India can turn to the reliable Kotak Mahindra Bank for options that are both competitive and budget-friendly. They will lend you money at a low interest rate of 7.70% or higher so that you can purchase a car from them. They recognise that each person’s economic circumstance is unique, which is why they offer a variety of adaptable repayment options to meet your requirements.

Kotak Mahindra makes it simple to obtain a loan because they do not require a significant amount of documentation and they approve loans in a prompt manner. They even offer additional services, such as insurance and extended warranties, for the automobiles that they assist you in purchasing. Kotak Mahindra Bank has a reputation for providing reasonable terms for auto loans, which contributes to the bank’s popularity among customers looking to finance a vehicle purchase.

ICICI Bank Car Loan

People in India who are interested in obtaining a car loan should consider ICICI Bank because it is a reputable institution with a good reputation. They will make it simple for you to finance the purchase of a car by offering competitive interest rates, beginning at 10.75%. The fact that they allow you to choose how long it will take you to pay back the loan is a wonderful perk that ensures it will fit comfortably within your financial constraints.

The application process for a loan with ICICI Bank is straightforward and quick, and the bank is well-known for approving loans quickly and providing customers with the necessary funds in a timely manner. If you are already a customer of ICICI Bank, the bank can make the process even more convenient for you by providing pre-approved car loans. A lot of people in India go with ICICI Bank when they need a car loan because of their excellent reputation and the fact that they put a lot of effort into making their clients happy.

It is important to compare the interest rates, terms of repayment, and other features offered by various banks before deciding on a financial institution to work with for a car loan. It is also essential to think about the reputation of the bank and the quality of the service it provides to customers.

Compare Best Car Loan Interest Rates in India for 2023

Car Loan Details

• Interest rates (monthly decreasing balance): Vary depending on the bank.
• Processing fees: Determined by the rules of the bank you select.
• Loan Tenure: Typically, you have a range of 1 to 8 years for your loan tenure.
• Pre-closure Fees: Each bank has its own pre-closure fees.
• Guarantor Requirement: Depending on the bank’s policies, a guarantor may be required.

Best Car Loan Products in 2023

Eligibility Criteria and Documents Required for Car Loan in India

The requirements for getting a car loan can differ between banks. However, the standard requirements for eligibility include:

• The age range should be between 18 and 75.
• A minimum of Rs. 20,000 per month in net income.
• employment with the current employer for a minimum of one year.
• Accepted employment categories: Paid or unpaid, employed by the government or a business.

You must present specific documents in order to prove your eligibility. Despite the fact that each lender may have different requirements, the following documents are frequently needed:

Requirements for Individuals:

• Aadhaar, a passport, a driver’s licence, a voter ID card, or a PAN card may be used as identification.
• Aadhaar, a passport, a driver’s licence, a ration card, or utility bills all qualify as acceptable forms of address proof.
• Depending on the type of employment, proof of income may include Form 16, salary slips for those who are salaried, the most recent income tax returns, and bank statements for the previous six months.

Car Loan Application Checklist

How to Calculate Car Loan EMI?

You can use the following formula to determine the EMI for a car loan in India:

EMI = (P * R * (1 + R)^N) / [(1 + R)^N – 1]

where:

P is the loan’s principal amount.

R is the interest rate per month (expressed as a decimal)

N represents the loan term in months.

For instance, your EMI would be determined as follows if you took out a car loan for Rs. 5 lakh with a term of 5 years and an interest rate of 9%:

EMI = (500000 * 0.09 * (1 + 0.09)^60) / [(1 + 0.09)^60 – 1]
EMI = 10367
This indicates that your EMI payment would be Rs. 10367 per month.

To quickly and easily calculate your EMI, you can also use an online car loan EMI calculator. You can select a car loan EMI calculator that is user-friendly and gives you the information you require from among the many that are offered online.

Choosing the Right Car Loan

Do’s

• Comparison: Use tools like BankBazaar.com to compare the various car loan options that are offered.
• Eligibility: To avoid having your application rejected, confirm that the loan amount you request is within your eligibility.
• Interest Rate: Choose a loan with the best interest rate available for the loan amount you want to borrow.
• Simplicity: Before requesting a loan, choose the car and make sure it is within your means.
• Hidden Fees: Keep an eye out for any unstated fees or charges related to the auto loan.
• Special Offers: When submitting your loan application, keep an eye out for any special discounts or promotions.
• Insurance: Analyze the car’s ongoing insurance costs.

Don’ts

• Excessive Applications: Avoid submitting multiple applications to banks as this can harm your credit score.
• Continued Applications: If your initial loan application is denied, refrain from applying for loans from different banks again as this increases the likelihood of receiving more denials.
• Dealer Dependence: Don’t just rely on the dealership for loans; it’s possible that the dealer’s loan won’t have the lowest interest rate..
• High Service Costs: Consider your current EMI and insurance premiums before choosing a car with a high service cost.

In case of bad credit, is a long-term car loan a better option in India?

• The borrower’s credit score: Regardless of the loan term, applicants with extremely low credit scores might have trouble getting approved for a car loan.
• The interest rate: Car loans with longer terms typically have higher interest rates than those with shorter terms. This implies that over the course of the loan, the borrower will end up paying a higher interest rate.
• The borrower’s monthly income: Poor credit borrowers might make less money overall. As a result, they might find it challenging to make their monthly car loan payments.

Features and Benefits of Car Loans in India

Competitive Interest Rates

In India, car loans are frequently provided at competitive interest rates, making them a cost-effective way to fund the purchase of a car.

Flexible Repayment Terms

India offers flexible repayment options for car loans, letting borrowers select a loan term that suits their needs and financial situation.

High Loan Amounts

In India, car loans can be used to pay for the purchase of a new or used vehicle and can cover up to 100% of the vehicle’s on-road cost.

Quick And Easy Loan Processing

The quick and simple processing of car loans in India enables borrowers to start driving their new vehicle as soon as possible.

No Pre-Payment Penalty

The majority of car loans in India don’t have pre-payment penalties, so borrowers can pay back their loans early without being penalised.

Tax Benefits

The interest paid on a car loan may be eligible for tax benefits for borrowers.

Discounts And Offers

On auto loans, some lenders might provide special deals and promotions like lower processing costs or interest rates.

Additional Products And Services

Some lenders might bundle extra goods and services like auto insurance or roadside assistance with their auto loans.

Car Loan Approval – Steps to Get the Loan Approved Faster

Here are some actions you can take to hasten the approval of your auto loan:

Check Your Credit Score

One of the most crucial elements that lenders take into account when assessing your loan application is your credit score. A high credit score will demonstrate to lenders that you are an accountable borrower who is likely to make timely loan repayments. Your credit score is available for free online checking.

Shop Around And Compare Offers From Different Lenders

There is a possibility that various creditors will provide car loans with varying interest rates, terms, and fees. Before settling on a particular loan, it is essential to do some comparison shopping and investigate a number of different lending options.

Get Pre-Approved For A Loan

The approval process for a car loan can be sped up significantly if the borrower gets pre-approval for the loan. When you are pre-approved for a loan, the lender will have already evaluated your credit history and other relevant financial data, and they will have provided you with a preliminary approval for a loan amount and interest rate. Before you go out and start looking for a vehicle, you should do this so you have an idea of how much you can borrow and how much your monthly payments will be.

Have Down Payment Ready

Lenders will see your ability to make a down payment as evidence that you are serious about purchasing a vehicle and that you are able to afford the loan. A larger down payment will not only decrease the total amount of money you will need to borrow, but it will also make your loan more manageable financially.

Be Prepared To Provide Documentation

When you apply for a car loan, the lender will typically require you to provide a variety of documentation in order to proceed with the application process. Proof of income, proof of employment, and proof of residence are some examples of the documents that may be required for this. Before you begin the process of applying for a loan, it is essential to make sure that you have all of the necessary documentation prepared.

Income Tax Benefits on Car Loans Taken to Purchase Electric Vehicles

encouraging countries to buy electric vehicles. This is a component of the efforts that the government is making to encourage the use of electric vehicles across the country.
Individuals are permitted to claim a deduction of up to Rs. 1.5 lakh on the interest that they have paid on a loan that was taken out to purchase an electric vehicle in accordance with Section 80EEB of the Income Tax Act of 1961. The loan must have been obtained between April 1, 2019, and March 31, 2023, in order to qualify for the deduction.

To be eligible for the deduction, the following conditions must be met:

• It is required that the loan be obtained from a financial institution that has been granted permission by the Reserve Bank of India.
• The individual who will be claiming the deduction must be the one to register the electric vehicle in their own name.
• The electric vehicle may only be used for the driver’s own personal transportation needs.

The deduction is available for the entirety of the loan’s term, or until the loan has been paid back in full, whichever comes first.

Individuals are required to file their income tax returns and include an attachment with the loan interest statement from the financial institution in order to be eligible for the deduction.

The following is an illustration of how the income tax deduction for car loans used to purchase electric vehicles works:

Imagine for a moment that an individual decides to finance the purchase of an electric vehicle by taking out a loan for the amount of Rs. 10 lakh at an annual interest rate of 10%. The person will be responsible for making an annual interest payment of one lakh rupees. The individual is eligible to claim a deduction for the interest paid in the amount of Rs. 1 lakh, which will result in a reduction of Rs. 1 lakh in their taxable income. Assuming that the person is in the highest income tax bracket, this move could result in a tax savings of up to Rs. 30,000 per year.

Individuals who are contemplating the acquisition of an electric vehicle are presented with a significant incentive in the form of a tax deduction that can be applied towards the cost of financing an electric vehicle. It has the potential to contribute to the overall cost of the electric vehicle being reduced, thereby making it more accessible to consumers.

Foreclosing a Car Loan

When you get a loan for a car, you will have to make regular payments known as Equated Monthly Instalments (EMIs) until you have completely paid off the loan. It is referred to as “foreclosing” or “prepaying” your loan if you want to pay off the loan earlier than what was originally planned for.

The prepayment of loans is generally permitted, though the majority of lending institutions levy some sort of fee or penalty for doing so. On the other hand, if you pay off your loan sooner than expected, there are some creditors who won’t charge you any additional fees.
If you want to get rid of your car loan and your income has increased, it is a good idea to go through with a foreclosure on the loan. It also indicates that you will no longer be required to make those installment payments on a monthly basis (EMI). Additionally, because the “hypothecation” (which is a fancy word for a lien on the car) is removed, you will be able to take full ownership of your vehicle.

However, keep in mind that this service may come with additional costs from certain lenders. Therefore, before you make the decision to foreclose on your loan, you should always read the terms very carefully.

Top up Loan on Your Car Loan

There is a type of loan known as a “top-up loan” that can be taken out in addition to an existing car loan if you already have one and find that you need additional funds for expenses such as a wedding, making repairs to your home, or dealing with a medical emergency. This means that you have the ability to borrow more money, up to 150% of the value of your vehicle. If you want to qualify for a top-up loan, the majority of lenders will want to see that you have been making your payments on time for at least nine months with the car loan that you already have. The good news is that getting a top-up loan does not require a lot of paperwork and can be done in a relatively short amount of time. HDFC Bank, Axis Bank, and Kotak Mahindra Bank are a few examples of financial institutions in India that provide these top-up loans.

Car Refinancing

When you get a new loan to replace the one you already have for your vehicle, this process is known as car refinancing. People do this to improve the terms of their existing loan, such as lowering their interest rate or extending the amount of time they have to pay it back, or to get better loan terms.

When people want to save money, they frequently refinance the loans on their vehicles. You can reduce your monthly payments and save money by refinancing your existing debt into a new loan with a lower interest rate. Car refinancing can be a good idea if interest rates have dropped, your current financial situation has improved, or you simply cannot afford high monthly payments on the vehicle you currently own. It is also a good choice if you believe that you were taken advantage of when you got your first auto loan.

Refinancing your auto loan may not be a good idea, however, if you have already paid off a significant portion of your original loan, the value of your vehicle has decreased significantly, or there are significant penalties for paying off the loan early. Refinancing can have a negative impact on your credit score, which could be problematic if you intend to apply for additional loans in the future.

End Note

Borrowers in India who are interested in purchasing a new or used vehicle have access to a number of features and benefits that make car loans an appealing choice among the available financial products. Before making an application for a car loan, you should, however, give careful consideration to your requirements as well as your financial situation. Before deciding on a loan, you should do some comparison shopping and investigate a number of different lending options. You can improve your chances of getting the best car loan deal possible and having your loan application approved in less time if you follow the advice provided in this article and apply it to your situation.

FAQs

Which bank provides the best car loan?

The best auto loans can be found at financial institutions such as SBI, Canara Bank, and HDFC.

Which bank gives 100 percent car loan?

SBI, HDFC, and ICICI Bank are just some of the financial institutions in India that are among those that provide auto loans of up to one hundred percent.

Is HDFC Bank good for car loans?

A car loan from HDFC Bank is a reliable option, as the bank offers competitive interest rates in addition to flexible repayment terms.

Can I get a 0% interest rate for a car loan?

There are very few auto loans available with 0% interest rates, but certain manufacturers do offer unique financing options that are structured to feel very similar to 0% interest.

What is the EMI for a 10 lakh car?

If you borrow Rs 10 lakh for a car loan at a 12% annual interest rate, your estimated EMI each month would be approximately Rs 47,073. This is based on a scenario in which you borrow Rs 10 lakh. In order to determine this, we will use the following formula: EMI = [P x R / 12 / (1+R / 12)N] / [(1+R / 12)N – 1], where P is the principal amount (Rs 10,00,000), R is the monthly interest rate (12% converted to months), and N is the loan tenure in months (2 years or 24 months).