Car loans are the easiest retail loan to get approved and one of the easiest to overpay on, because the loan is usually arranged in the same hour as the car.
What gets funded
Lenders fund 80–90% of the ex-showroom price, occasionally 100% for strong profiles. Registration, insurance and accessories are on you. On a ₹12 lakh ex-showroom car with an on-road price near ₹14 lakh, a 90% loan is ₹10.8 lakh — leaving a gap of about ₹3.2 lakh in cash, not the ₹1.2 lakh most buyers plan for.
Rate, tenure, EMI
New cars run roughly 8.5–11%; used cars 12–16%, because the security depreciates faster. Tenures go to seven years, but the car will be worth less than the outstanding balance for much of that. Five years is the sensible ceiling.
On ₹10 lakh at 9.5%: five years is about ₹21,000 a month and ₹2.6 lakh of interest; seven years is about ₹16,400 and ₹3.8 lakh. The lower EMI costs ₹1.2 lakh.
Why the dealership is not usually cheapest
The finance desk is paid by the lender it places you with. It is convenient and sometimes competitive, but you should walk in with one outside sanction in hand. The difference is frequently 0.5–1.5%.
Benefits worth knowing
- Self-employed buyers can often claim the interest as a business expense, and depreciation on the vehicle, if it is used for business.
- Electric vehicles attract lower rates at several lenders, and Section 80EEB allows a deduction on interest for eligible EV loans.
- No prepayment penalty at most lenders on floating car loans — check, because fixed-rate car loans often carry 3–5%.
Three things to check before signing
Whether insurance is bundled into the loan amount. Whether the rate quoted is flat or reducing — a “7% flat” is roughly 13% reducing, and the difference is enormous. And what happens to the hypothecation removal when you close the loan, because getting the RC updated later is a chore nobody warns you about.
Details on the car loan page. Compare an outside offer before you sign at the showroom — get a quote from us.
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