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Vehicle Loan Interest Rate
To help people realise their dream of owning a car, Muthoot Finance offers a range of vehicle loan options for the purchase of a new or used, personal or commercial vehicle. When you avail a vehicle loan, the vehicle you purchase with the money serves as collateral or security against default. Once you have paid off the loan amount as well as the interest rate applicable on the amount, you can have the hypothecation removed from the vehicle’s Registration Certificate.
Quick Loan Processing
Attractive Interest Rates
Pocket-friendly EMIs to suit your needs
The Interest Rate of Vehicle Loans
The vehicle loan interest rate is the amount that is charged by the financial institution as a fee for lending money to an individual. The interest is expressed as a percentage of the principal amount and is typically calculated on an annual basis. The EMI that an individual pays includes a part of the interest payment and the rest of it is the loan amount being repaid. At Muthoot Finance, you can access the most competitive vehicle loan interest rates, based on your requirements and eligibility.
Types of Interest Rate
There are two different types of interest rates that are applicable to a vehicle loan. These are:
Fixed Interest Rate: A fixed interest rate in an auto loan means that the lending rate remains the same throughout the loan repayment tenure. The interest rate for your car or bike loan does not change even if there are any changes in the lending rates of banks or in the repo rates of the Reserve Bank of India (RBI). The good thing about opting for a fixed interest rate while availing a two-wheeler or four-wheeler loan is that the EMI amount also remains the same throughout the tenure.
Since this type of interest rate remains unaffected by any kind of market fluctuations, the borrower gets a sense of certainty. It is ideal for people who prefer to plan their budget in advance.
Floating Interest Rate: A floating interest rate is something that is subject to revision quarterly. The interest rate of your car or bike loan is calculated using a base rate with a floating element as an addition. When this base rate changes, the overall interest rate also changes accordingly. Generally, floating interest rates are 1% to 2.5% lower than the fixed interest rate. One important thing is that any changes in the interest rate do not affect the EMI amount in any way. It is the loan tenure that gets affected by these changes in the floating interest rate. Whether you are availing a loan for a new or pre-owned car or a two-wheeler, it is important to make an informed choice as to which type of interest rate is right for you. You can choose your preferred type of interest rate while keeping your financial requirements and repayment capacity in mind.
Factors Affecting the Vehicle Loan Interest Rate
The vehicle loan interest rate that is offered to an individual varies from case to case. There are various factors that affect the interest rate of a vehicle loan, including:
Type of Vehicle: The vehicle loan interest rate is different for a two-wheeler, different for a pre-owned vehicle, a new vehicle, and a commercial vehicle. The type of vehicle you plan to buy will decide the amount you need to borrow, which in turn will also impact the vehicle loan interest rate.
The Applicant’s Credit Profile: Whether it is a business or an individual, the credit profile and credit score of the applicant have a significant impact on the offered interest rate. A high credit score denotes the applicant as being highly creditworthy and a low-risk applicant. People who pay back their debts and credit card bills on time have a good credit history and high credit score, which allows them to avail lower interest rates than most.
The Make and Model of the Vehicle: The interest rate for a vehicle loan also differs from brand to brand and vehicle to vehicle. For example, if the applicant wishes to buy a luxury vehicle, they will need a higher loan amount, which may attract a lower interest rate.
Financial Track Record: When applying for a commercial vehicle loan, the financial stability of the applicant matters a lot. Sound financial statements spanning the last few years reflect business stability and confirm the business’s capability of paying back the loan on time. So, a strong balance sheet and ample profit margins can help get low interest rates as well.
Steady Income: Individuals who can show a steady income and job stability may also be offered lower vehicle loan interest rates.
Tenure of the Loan: Longer loan tenures attract higher interest rates but result in lower EMIs. On the other hand, shorter terms mean higher EMIs, but lower interest rates. However, one should always choose a tenure and EMI option that is affordable for them.
For Pre-owned Vehicles
Factors that can impact the vehicle loan interest rate for pre-owned vehicles include:
Age of the Car: While applying for a used car loan the interest rate gets affected by the age of the vehicle. The rate of interest is generally higher for older vehicles as compared to newer ones. So, the older the vehicle, the higher the vehicle loan interest rate may be.
Condition of the Vehicle: : In the case of pre-owned vehicles, the condition of the vehicle also affects the interest rate.
Kilometres Clocked: How much the car has already been used (kilometres covered) can also affect the interest rate as more running denotes more wear and tear.
How to Avail a Lower Vehicle Loan Interest Rate
Being a buyer, you would always want to reduce the interest applicable on your loan. Here are a few steps you can take to ensure you can avail a bike or car loan at the lowest interest rate:
Clean Up Your Credit Score: If your credit score is not up to the mark and is keeping you from getting the best interest rates, you can work on improving your score first before you apply for a vehicle loan. Make sure you use your credit card within a limit that you can afford (aim for 30% usage or less) and ensure you make timely payments for the same. Streamline your bill payments and clear up your old accounts. The longer you have had your credit accounts, the more favourable you appear to lenders. All these steps can help improve your credit score, allowing you to get low vehicle loan interest rates as well.
Buy a Cheaper Vehicle: Make sure you don’t buy what you can’t afford. Lower priced vehicles come with vehicle loans that have lower interest rates.
Make a Big Down Payment: The down payment is the money you pay upfront for purchasing a vehicle. The rest of the cost of the vehicle is covered by the vehicle loan. The higher the down payment that you make, the lower will be the loan you need to avail, which means that you would be offered lower interest rates as well.
Prepay Your Loan: Any time you have surplus capital, put it towards prepaying your car loan, the longer the loan is active, the more interest it accrues. Prepayment generally involves a small penalty to be paid, but the amount is not that much and is easily affordable.
Special Interest Rates at Muthoot Finance
At Muthoot Finance, we offer customers the most competitive vehicle loan interest rates. Government employees, students, farmers, and women are offered special interest rates for the purchase of personal or commercial vehicles.
Existing Customers too can avail special vehicle loan interest rates at Muthoot Finance.
Keep a Track of Your Vehicle Loan
From applying for a vehicle loan and tracking the application to monitoring the repayment status, Muthoot Finance has made everything extremely easy for all customers. The Muthoot Finance website and app offer several capabilities, ranging from an EMI calculator to loan account monitoring. Offering competitive vehicle loan interest rates, personalised services, a wide network of branches, minimal documentation, quick processing, and much more, Muthoot Finance can help you turn your dream of owning your own vehicle into a reality.
Quick loan processing
Attractive interest rates
Pocket-friendly EMIs to suit your needs
services we provide
The interest rate on a vehicle loan varies depending on factors such as:
● The type of vehicle one is buying e.g. a two-wheeler or a four-wheeler, commercial vehicle or personal one, new car or a second-hand car.
● Duration of Loan - Higher interest rates are charged on loans with longer terms, but the EMIs are lower. Shorter tenures, however, result in higher EMIs but lower vehicle loan interest rates.
● The credit history of the applicant - The applicant's credit history and credit score, whether they are a person or a corporation, have a significant bearing on the interest rate that is being provided. A high credit score suggests that the applicant is creditworthy. People with a strong credit history and excellent credit scores can obtain cheaper interest rates than most since they can pay off their debts and credit card payments on time.
At Muthoot Finance, customers can pay EMIs [principal + interest rates vehicle loan amount] hassle-free with our 'Muthoot Online' web application. It is a one-stop gateway for repaying different loan amounts like home, gold, vehicle, and personal loans.
Get yourself registered on the application and log in to avail the benefits mentioned below:
● View all of the loans that are currently outstanding
● View the history of all outstanding loans.
● Pay for several loans at once to avoid paying payment gateway fees.
● Draw available additional funds from qualified loans [TOPUP]
● View your loan account statement anywhere and anytime
You can also pay through netbanking and debit/credit card but won't be able to enjoy the features mentioned above through these payment options.
If you miss your EMI payments for the first three months (90 days), you will only be charged interest and will continue to get calls from the institution to catch up on your payments.
After that, it will be considered default, and action will be taken if you don't pay your EMIs [principal amount + vehicle interest rates] for three consecutive months. A notice of default with a deadline will be given to the concerned person by which he/she must make the required payments or forfeit the car they pledged as collateral.
If anyone still can't pay their debts within the time frame specified in the notification, the ownership of the asset will be taken from the respective person.
To circumvent that, you are given a reasonable and best-in-the-market vehicle loan interest rate. That being said, follow these recommendations when applying for a loan:
Purchasing an affordable Car - Vehicles with lower ex-showroom prices result in loans with lower interest rates. Make sure you choose the car keeping in mind your budget.
Give a high Down Payment - The cash you pay upfront when buying a car is called the down payment. The car loan will cover the remaining balance of the purchase price. Your required loan amount reduces when you pay a higher down payment and so does the loan interest rate.
Improve your credit score - one can concentrate on improving their credit score before applying for a car loan if it is below average and preventing them from receiving the best interest rates. Use a credit card (target a 30% or lower utilization rate) and pay off the balance in full and on time. Streamline your bill-paying processes and close any unattended accounts. All these steps will aid in qualifying for a less expensive interest rate on the car loan.
Yes, customers have the flexibility to prepay their loans at Muthoot Finance. One can prepay their auto loan whenever they have the funds available. Higher the interest rate on a car loan, the longer the loan stays outstanding. Prepayment often has a predefined penalty that must be paid - the sum is fairly manageable.