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Business News/ Money / Personal Finance/  Car loan compared: Interest rate, EMI, processing fee
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Car loan compared: Interest rate, EMI, processing fee

A loan for longer may mean smaller EMIs, which makes the car seem more affordable, but overall, you pay more as interest
  • Don’t forget that a car is a depreciating asset, so taking a bigger loan may not be the best thing to do
  •  (Photo: iStock)Premium
    (Photo: iStock)

    It is tempting to buy a new car, be it an upgrade, a first car or another car for the family. Whatever be the reason, a car loan makes the purchase easier. Car loans are usually of 3-5 years but some lenders may offer loans for up to 7 years too.

    A loan for longer may mean smaller equated monthly instalments (EMIs), which makes the car seem more affordable, but overall, you pay more as interest. Don’t forget that a car is a depreciating asset, so taking a bigger loan may not be the best thing to do.

    But if you take a car loan for a short duration, the EMIs will be heavy and non-payment will mean a blot on your credit report. Conditions apply to the loan amount also. For instance, some lenders give a loan for the full ex-showroom price of the car, while others may offer a loan up to 80%. Apart from the interest rate on a car loan, also take a look at the applicable processing fee and other charges.

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    Published: 25 Aug 2019, 06:52 PM IST
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