Best Car Loan Strategy and Loan Options?

[pulkit.gupta4444]

Hi everyone, I’m planning to purchase a car worth ₹23 lakh with a 20% down payment. Currently, I only have the funds for the down payment, but I’m expecting to receive multiple bonuses in the future, which could help me pay off the loan early..

Some people have suggested taking a long tenure loan to keep EMIs manageable and using bonuses or extra income to make prepayments and close the loan faster. Does this sound like a good strategy, or should I consider other options?

Also, I’ve been hearing that loans from PSU banks are a good option. How can I apply for a loan from a PSU bank online if I don’t have an account with them? Are there any platforms where I can compare car loans from different banks and get the best deal?

Any advice or suggestions would be really helpful. Thanks in advance!"

 

[RitamModak]

Assumptions:

• Car price: ₹23 lakhs
• Down payment: 30% (₹6,90,000)
• Loan amount: ₹16,10,000
• Interest rate: 8% per annum
• Loan tenure: 2 years (24 months)

Repayment Table:

Month	Beginning Balance	Monthly EMI	Interest Paid	Principal Paid	Ending Balance
1	₹16,10,000	₹73,134	₹10,667	₹62,467	₹15,47,533
2	₹15,47,533	₹73,134	₹10,317	₹62,817	₹14,84,716
3	₹14,84,716	₹73,134	₹9,965	₹63,169	₹14,21,547
...	...	...	...	...	...
23	₹1,78,923	₹73,134	₹1,193	₹71,941	₹1,06,982
24	₹1,06,982	₹73,134	₹713	₹72,421	₹0

Export to Sheets
Note: With a 30% down payment, the monthly EMIs are significantly lower compared to a 3% down payment. This is because you're borrowing a smaller amount, which reduces the interest costs.

Key benefits of a higher down payment:

• Lower monthly payments: This provides more financial flexibility.
• Reduced interest costs: You'll pay less in interest over the loan term.
• Faster payoff: You can pay off the loan more quickly.

If possible, try to save up for a higher down payment to enjoy these benefits.

Disclaimer:​

Interest rates for car loans can fluctuate frequently. For the most accurate and up-to-date information, I recommend checking with individual banks or using online comparison platforms.

Here's a general comparison of interest rates from major banks in India as of October 2024. Please note that these rates may have changed since then:

Bank	Interest Rate (Approximate)
HDFC Bank	7.25% - 10.25%
ICICI Bank	7.50% - 10.50%
State Bank of India (SBI)	7.75% - 10.75%
Axis Bank	7.90% - 10.90%
Bank of Baroda	8.00% - 11.00%

Export to Sheets
Factors that can affect interest rates:

• Credit Score: A higher credit score generally leads to lower interest rates.
• Loan Amount: Larger loan amounts may have slightly higher interest rates.
• Loan Tenure: Longer tenures might have slightly higher rates.
• Type of Car: The type of car (new or used) and its value can influence interest rates.

Online Comparison Platforms:

• BankBazaar: ***********.bankbazaar.com/
• Paisabazaar: ***********.paisabazaar.com/

These platforms allow you to compare offers from multiple banks and find the best deal based on your specific requirements.

Cashback Cards for Down Payments:​

Cashback cards can be a great option for earning rewards on your down payment for a car. Here are some of the top cashback cards in India that you might consider:

HDFC Bank Regalia Credit Card​

• Cashback: Offers 1% cashback on all purchases, including down payments.
• Annual fee: ₹2,500
• Other benefits: Travel insurance, airport lounge access, and complimentary golf green fees.

American Express Membership Rewards Credit Card​

• Cashback: Offers 1% cashback on all purchases.
• Annual fee: ₹3,000
• Other benefits: Travel insurance, airport lounge access, and concierge services.

Remember to:

• Compare offers: Research different cashback cards and compare their features, rewards, and fees.
• Read the terms and conditions: Understand the terms and conditions of the card before applying.