Want to buy your dream car? 8 benefits for availing car loan - SBI vs ICICI Bank vs HDFC Bank

Just like every other loan, you also repay your car debt via EMIs which includes principal amount and interests.

As India adapts to a more modern lifestyle, almost everyone wants to have a car all their own. Photo: Pixabay

As India adapts to a more modern lifestyle, almost everyone wants to have a car all their own. If possible, their dream car! Demand for four-wheelers has seen a consistent rise, especially during festive season. However, not many can afford to buy a car from own funds. In such cases, car loans lend a helping hand. Car loans are simpler form of loans where you borrow some amount from banks or other financial institutions with intent to repay them back for a specified tenure along with interest rates. Just like every other loan, you repay your car debt via EMIs which includes principal amount and interests.

However, not many will be comfortable entering into the debt-burdened category. Hence, the dream is further delayed. Interestingly, ICICI Bank explains why car loans are better form of investment to fulfill your four-wheeler dream.

There are as many 8 benefits that car loans offer. Check them out below:

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1. Customized EMIs:

A car loan borrower can easily customize the EMI as per his repayment ability. Initially, while paying a wider margin amount a person can easily cut down the EMI that he/she is entitled to give over the tenure of the loan.

2. Enhanced eligibility:

In current economic scenario, the competition among the financiers has increased which results in buyers benefiting in terms of maximum coverage of population under car loan eligibility criteria. With a basic minimum income stability one can easily avail a car loan from banks and other financial institutions.

3. Subject to collateral:

In case of a car loan, the vehicle bought itself is termed as the collateral. There is no need of serving other property as additional security for the loan. In the event of default, the bank can only repossess your car.

4. Low allowances:

Banks finance upto 95% of the car on road price which indicates that the customer does not require spending in accessories, registration and insurance. Thus, people with less funds can also enjoy the ecstasy of owning a luxury car.

5. Simple process:

Banks have simplified the loan procedure. Instant approvals and disbursements have made a car loan look as attractive as the car. The documentation and approval process takes less than a day and on the spot approvals woo more number of people into taking the car loan.

6. Ownership:

A customer can make any modifications to the vehicle throughout the duration of the loan. At the end of the loan term he/she will own the car.

7. Future savings:

Used cars might be tempting at first but in the longer run they might require costly repairs and have frequent breakdowns. While purchasing a new car through auto loan, a customer gets the peace of mind that he/she won’t have to pay for the repairs for quite some time. Many newer cars are more fuel efficient too.

8. Credit History:

A customer with poor credit history can obtain an auto loan. When you take a auto loan, it actually help the customer’s credit history, as long as he/she stay on top of payment deadlines.

Banks car loan interest rates:

SBI - General car loan has rates ranging from 9.45% to 9.95%. Also, the bank offers a Certified Pre-owned Car Loan Scheme with rates from 11% to 12%. Then, there is SBI Car Loan Lite option where a customer will have to pay 11.60% to 12.60% rates.

ICICI Bank - For new car loan, interest rates are set at 12.85% upto 23 months to maximum 35 months tenure. While 9.30% rate is levied for tenure between 36-84 months. In case of used car loans, you will have to pay rate of 14.25%.

HDFC Bank - Between 9.75% to 10.60% rate is applicable on car loan over here. If there is overdue in EMI interet, then 2% per month will levied on you.

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