Auto loan rates in India have been rising steadily in the last few years, and now the new government has announced a new set of guidelines to regulate the lenders’ practices.
But what can you expect?
In a nutshell, you can expect auto loan terms to be a little bit lower than those offered by big lenders.
Here’s a look at the best lenders for auto loan in India.
Bank of BarodaBank of Barodas auto loan rate ranges from 0.35% to 0.50%.
For the first time in its history, the bank is also introducing auto loan repayment options, which are expected to increase lending in the coming years.
The bank is currently accepting applications from borrowers who are looking to repay a loan as soon as possible, but it has extended its terms to a maximum of two years.
Bank will provide the option of repayment of the loan up to two years after the borrower has repaid the amount due.
Interest rates for the loans are expected be low, and borrowers can choose the repayment rate of up to 10% of the total loan amount, or a maximum rate of 12%.
The bank says that borrowers can repay the loan on their own account and they can defer payment of the principal on their loans, but they can only pay the balance of the interest they received on the loans after the repayment period.
Interest will be calculated on the total amount of loan repayments made and calculated as a percentage of the amount of the monthly interest earned by the borrower.
The amount of interest that the borrower can pay on a loan is capped at Rs 1 lakh per month.
In this case, interest payments would be Rs 1.5 lakh.
This new set-up will help borrowers who have been struggling to repay loans for too long, and is expected to help the banks to earn more from borrowers.
State Bank of India State Bank will be one of the first big banks to offer auto loan.
The new guidelines are expected for December.
The banks has said that the new set up will help in the long run to reduce loan defaults.
Interest payments on auto loans will be capped at a maximum amount of Rs 5 lakh per annum and borrowers will be allowed to defer payment.
Interest rate will be 10% for the first two years, then the banks will be able to set their interest rates on a monthly basis, and this will be the default rate for the loan for the next two years or until the borrower reaches a minimum of Rs 2.5 crore.
Axis BankIn April 2017, Axis Bank was given a five-year lease of its former Bank of Bombay premises by the Government.
Axis bank will start accepting applications in January 2019 from borrowers seeking to repay their loans within the next five years.
Rates will be lower than what other banks are offering and borrowers are expected the option to pay the principal off in the form of a deposit, or pay it as interest on the loan.
This is expected for borrowers with loans over Rs 1 crore.
Interest is capped on the amount borrowed and the amount can be deferred up to 30% of loan amount.
The terms of this deal are expected till 2019.
The agreement will cover the loans of around 50,000 loanees, who will be offered a loan for an average of 5.25% of their monthly income.
Interest can be charged on the balance, as well as the interest earned on the debt.
Interest on loans will also be capped and the total repayments will be limited to Rs 2 lakh.
State Payments CorporationOf course, the biggest change in the banks plans to offer car loans is the introduction of auto loan forgiveness, which will see the amount forgiven reduced from a maximum Rs 5,000 to a Rs 1,000.
Interest charges will also remain at the current rates, but the banks are also expected to offer an interest rate of 15%.
Indian National BankThe new guidelines will come into force on December 1, 2019, and the new banks are expected offer the option for borrowers who do not have a car to repay the loans.
The rates will be reduced from 5.75% to 4.25%, and borrowers may be able pay off the principal in the interest form.
Interest charged will be Rs 2,000 per month for the new customers and Rs 1 for the existing customers.
Axis-ServeBank will also introduce auto loan for those who have a disability and/or have to make an application.
The auto loan will be available to borrowers who, for the purpose of a disability, cannot make payments.
The borrower will be asked to deposit up to Rs 5.5 million towards the loan, with the interest rate set at a fixed rate of 6.25%.
This will be for the duration of the benefit, but will also cover the duration after the benefit expires.
The interest will be charged at the same rate as for loans.
For those who wish to defer payments, the interest can be paid on the principal at a rate of