Things to watch out for when taking out an auto loan
If you are thinking of buying a new car on loan, don’t just go to a lender, who to attach with the dealer. Check other lenders before taking out a loan from the bank manager sitting in the dealer’s showroom.
Typically, public sector banks are slightly cheaper than private lenders. But they also tend to lend to their existing customers.
One of the key things you need to keep in mind is the processing fee. Lenders have different ways of billing it. Some charge a percentage of the loan amount, but have a minimum and maximum limit. Others have a fixed fee, depending on the loan amount.
Some also offer a discount on the processing fee if the borrower applies online or through their app.
The maximum term for a car loan is generally seven years.
Some lenders offer better rates and a longer repayment term for electric vehicles. The State Bank of India, for example, offers a 0.20% rate cut on the purchase of an electric vehicle (called a green car loan). The repayment term can be up to eight years, according to data from Paisabazaar.com.
Here are the auto loans from different lenders and their processing fees:
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