Car loan are the simple means to a glorious life milestone- owning your dream car. Almost all of us want to own that shiny set of wheels and drive it triumphantly, into the sunset. However, owning a car (vehicle in general) in India is a costly proposition, one that usually demands the impetus of a sizable financial assistance from banks/ financial institutions that have dedicated loan products in this regard
Why Choose a Car Loan?
Choosing a car loan in India has two distinct reasons and advantages. Firstly, cars are expensive. This is a costly investment that is usually not completely affordable in the case of a typical middle class Indian. While his/her savings may account for a sizable portion of the purchase amount of the vehicle, a significant portion of the aforementioned purchase must be covered by the amount as provided by the car loan.
Car Loans – Features and Benefits
When it comes to car loans in India, in general, the following features and benefits are freely offered. Note that, the following is a generalized look at the advantages offered by car loans in general. Individually, car loan lenders may have highly customized and specialized offerings for their customer base.
- Helps you purchase a better car than the one available in your budget. While this may not be a rule, it holds true for a vast majority of car purchasers in India.
- Allows you to procure a vehicle quickly- without spending too much time arranging for the money through the time-tested concept of ‘saving for it’.
- Helps you manage the cost of purchase of the new car by spreading it across a longer duration of time. Thereby, this keeps you in control of your spending and makes the car much easier to pay for.
- Most car loan offerings in India have secured loans, meaning, the car serves as the security/collateral for the loan. This poses a little financial risk for you- at worst, you default on the repayments and lose the car, plus your credit score is damaged to smithereens. However, you do have a measure of control over the proceedings. PS- Don’t default on your car loan EMIs.
- Procuring a car loan is usually simpler as compared to other loan products. Individuals with slightly unsavory credit scores can also hope to nail one down. However, this option differs from bank to bank.
- Car loans in India often utilize the fixed interest rate option when it comes to repayment via EMIs. This means, you are always assured of a fixed amount that needs to be repaid on a monthly basis. This takes the surprise out of the financial planning that goes into the car purchase process. Thank god for that!!
- The actual maximum loan amount depends on the vehicle to be purchased and varies from bank to bank. Mostly however, this is 100% of the vehicle’s on-road price. The repayment tenure usually stretches from 5-10 years and offers different interest scales for different tenure slabs.
- Most importantly, a car loan helps you buy your dream car. Aside from being a purely transport option, the car serves as a confidence booster and your means to assert the hard-earned financial freedom.
Comparing Car Loans from Different Banks
| Bank. | Loan Amount. | Tenure. | Interest Rate. | Features. |
| HDFC Bank | 100% (ex-showroom price) | Upto 7 years | 10.50%-12.50% (depending on individual factors) |
|
| ICICI Bank | 100% (ex-showroom price) | Upto 7 years | 10.75%-12.75% (depends on the loan tenure) |
|
| SBI | 85% (On-road price, when net annual income is upto or above Rs.10 lakhs) | Upto 7 years | 10.30% (may range upto 11.10% for differing conditions) |
|
| Axis Bank | 85% (ex-showroom price) 95% (on select models) | Upto 7 years | 11.50%-12.50% (depending on individual factors) |
|
| Magma Fincorp | 100% (ex-showroom price) | Upto 5 years | 12%-16% (depending on individual factors) |
|