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Introduction

Federal Bank is a private sector bank in India and has its headquarters in Kochi. The bank is a scheduled commercial bank and is almost a century old. The bank has a huge customer base not only in India but also overseas and has been catering to the banking needs of its customers by providing them unique and competent banking solutions for their various banking needs.

Loans are considered to be among the most popular products of the banks and Federal Bank provides loans to its retail as well as corporate customers. Retail loans include many loan products like home loans, car loans, personal loans, gold loans, education loans, etc.

The car loans of Federal Bank are offered for the purchase of new cars, old cars, or used and second-hand cars as well as for two-wheelers. Given below are the details of the car loans of Federal Bank.

Highlights of Federal Bank Car Loan Interest Rates

Federal Bank Car Loan Interest Rates

Particulars

Details

Maximum Amount of Loan

Up to 100% of the Ex-Showroom Price

Rate of Interest

  • For New Cars
  • Starts from 8.50%
  • For Used Cars
  • Starts from 13.80%

Tenure

  • For New Cars
  • Maximum 84 months (7 years) for salaried category as per Bank’s Policy
  • Maximum 60 months (5 years) for others
  • For Used Cars
  • Maximum 60 months (5 years)

Additional Benefits

Free Personal Accident Insurance up to Rs. 10,00,000 (in case of individual borrowers)

Pre-payment Charges

NIL Charges for Individual Borrowers

Factors Affecting the Rate of Interest of Federal Bank Car Loans

There are many factors that influence the rate of interest of any car loan. These factors can be internal or inherent to the product of the Bank or due to any external factor. Some of such factors are mentioned below.

  • The type of interest charged by the bank is one of the crucial factors responsible for determining the rate of interest as floating rate of interest is generally lower than the fixed rate of interest.
  • Bank will review the credit profile of the borrower for determining the rate of interest. A person with higher credit score and a sound repayment capacity will benefit the borrower with a lower or reduced rate of interest as compared to the other case.
  • A lower amount of loan along with a shorter tenure will also reduce the rate of interest as it is a reduced risk on part of the lender and vice-versa.
  • The biggest external factor affecting the rate of interest is the inflation of any country. It is directly proportional to the rate of interest on any loan product.

Eligibility for Federal Bank Car Loans

Federal Bank has set certain eligibility criteria for a person to be eligible to apply for the car loan of Federal Bank. Given below are the details of such eligibility as per the guidelines of the Bank.

Age 

The minimum age requirement for the car loan of the bank is 21 years and the maximum age requirement is 60 years.

Residency

The residents of the country as well as eligible Non-Residents can apply for the car loans of the Bank.

Income Threshold

The bank has set a minimum income requirement for an applicant to be eligible for the car loan of the bank. These thresholds are with respect to the class of individuals that apply for the loan. The details of the same are tabled below.

Applicant

Minimum Monthly Income Requirement

Individual

Rs. 20,000 (Lower requirement for rural and semi-urban locations)

Agriculture Income / Rental Income

Rs. 40,000 (including such agriculture income or rental income)

The above minimum monthly income has to be considered after taking into consideration any previous commitments as well as the proposed EMI of the loan to be borrowed.

What are the documents to be provided for Federal Bank Car Loans?

Federal Bank has set a list of documents that have to be provided along with the application form for the car loan. These documents have to be submitted mandatorily along with the application form. The documents to be submitted can be classified under two categories and includes basic KYC documents along with few other documents that provide the proof of the income of the applicant. Such documents are based on the class or type of the applicant. The details of such documents are mentioned below.

KYC Documents

  • Identity Proof (Passport / Voters ID / Driving License/ PAN Card / Aadhaar Card)
  • Address Proof (Passport / Voters ID / Driving License / Aadhaar Card)
  • Age Proof (Passport / Birth Certificate / Driving License / SSLC or AISSCE Certificate)
  • Additional documents in case of NRI applicants (Certified copy of Passport, Visa, Work Permit, ID card)

Income Proof

Category of Applicants

Documents Needed

Resident Salaried

  • Latest Salary Certificate /  Salary Slip (3 months)
  • Copies of IT returns (2 years) or Form No.16 (2 years) 
  • Latest 6 month's Bank Account statement evidencing the salary credits

Resident Self Employed

  • Business Existence Proof & Documents Relating to the Business Profile
  • Last 12 months bank a/c statements
  • IT returns for 2 years along with Balance Sheet, P&L Account for the respective years. Wherever available, Tax paid challans may also be collected OR Last 2 years IT returns supported by Tax calculation sheet & Tax paid challans

Non Resident Salaried

Applicants can submit either of the documents as per the following available options -

Option 1

  • NRE account statement with any bank for last one year
  • Embassy / CRO Certified Salary Certificate/ Latest 3 months Salary Slip OR Latest Salary Certificate/ Salary Slip (3 months) supported by 6 months’ Salary Crediting Statement

Option 2

  • Two years NRE a/c statement of the customer and/or resident accounts of spouse/parents (with us/ other Bank) in which remittance is made.

Non Resident Self Employed

Applicants can submit either of the documents as per the following available options -

Option 1

  • Proof of Business existence & Business Profile
  • Last 12 months bank a/c statements
  • Balance Sheet, P&L Account for the past two years. Where ever available, Tax paid challans may also be collected

Option 2

  • Two years NRE a/c statement of the customer and/or resident accounts of spouse/parents (with us/ other Bank) in which remittance is made

Additional Documents

The additional documents that have to be provided by the applicant relate to the vehicle to be purchased from the loan availed as well as additional guarantee or collateral related documents in case of high risk loans. Such additional documents needed are mentioned below.

  • Invoice of the car
  • Sale Letter and valuation letter from the dealer (whether authorized or not) in case of used cars
  • Latest land tax receipt or residential proof (latest utility bills)
  • Property documents to be provided by the applicant in case the loan amount is over Rs. 25,00,000
  • Documents for the title
  • EC for 13 years
  • Possession Certificate
  • Location Sketch
  • Land Tax receipt
  • Building Tax Receipt

Salient Features of Federal Bank Car Loans

Federal Bank Car Loan is among the many lenders of car loans in the market. These car loans come with extended repayment tenure and have a very reasonable rate of interest. Also, the Federal bank is among the few lenders that can provide up to 100% of the value of a car as loan. Discussed below are all such unique features of the car loans of Federal Bank that make it a lucrative option for the customers.

As mentioned above, Federal Bank provides up to 100% of the ex-showroom price of the vehicle to be purchased out of the loan availed.

The repayment tenure of the loan provided by Federal Bank is varied depending on the type of vehicle. The tenure for each type of vehicle is tabled below.

Type of Vehicles

Tenure 

New Vehicles

  • For salaried persons - 7 Years (84 months)
  • For others - 5 Years (60 months)

Used Vehicles

5 Years (60 months)

The rate of interest for the car loans provided by the Bank is based on the type of vehicle bought by the borrower. These rates are mentioned below.

Type of Risk

Rate of Interest

New Vehicles

8.50%

Used Vehicles

13.80%

The Bank also provides a free personal accident insurance policy for individual borrowers for up to Rs. 10,00,000 as well as zero pre-payment charges for such borrowers.

Apart from the above features, the Bank has also specified certain conditions in relation to the loan for used cars. These conditions include the following,

  • The vehicle has to be charged depreciation at the rate of 15% for the first year in a straight line method and 10% for the following years. For this purpose, a part of the year will be considered to be a full year.
  • Another important condition is that the age of the vehicle cannot be older than 3 years
  • The maximum amount eligible for loan is 75% of the value that is lower of,
  • Depreciated value
  • Market value
  • Purchase value

FAQs – Federal Bank of India – Car Loan Interest Rates

1. Are the interest rates on car loans floating rates or fixed rates?

The rates of interest on car loans of Federal Bank are floating rates which are linked to the RBI Repo Rate.

2. What is the maximum amount of loan that can be availed under Federal Bank Car Loan?

Federal Bank can provide full value of the car as loan i.e. 100% of the ex-showroom price.

3. What are the current interest rates offered by the Federal Bank for car loans?

The current interest rates on car loans of Federal Bank is 8.50% for new cars and 13.80% for used or second hand cars.

4. Does a longer tenure mean a lower rate of interest?

No. A longer tenure refers to an increased risk on part of the lender hence the interest rate is increased.

5. Can a person get financing options only through a bank?

A person intending to buy a vehicle can get the financing option through a dealer or a bank. The dealer may charge a markup fee on the finance provided and hence such finance may be slightly costlier as compared to finance received through the Bank.

6. Can a person apply for the car loan through the website of the Bank?

Yes. Applicant can apply for the car loan through the website of the bank by clicking on the following link Home>> Personal >> Loans>> Personal Car Loan>> Enquire now

7. How to use the EMI calculator?

A person can use the EMI calculator to calculate the estimated EMI on the proposed loan. For this the applicant will have to click on the link mentioned above and provide the following details.

  • Principal Loan Amount
  • Interest Rate
  • Loan Tenure
  • Additional Monthly Payment

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