The interest rates for a car loan do not depend on the loan tenure. But, the longer the tenure, the more is the outflow of money towards the paying of the interest. If you opt for a shorter tenure, then the total outflow of money towards the paying of the interest will be much lower.
Interest rates are dependent on a few other factors such as:
1. Credit score:
If you have a good credit score that is above 750, the interest rates that you will receive for you car loan will be lower. A credit score is a three-digit number that shows your creditworthiness. Banks use your credit score to assess if you are a reliable customer or not. So, if you have a poor credit score, the banks will consider you to be a risky customer and will increase the interest rate for the loan.
2. Credit history:
If you have a long credit history that is positive, then the interest rates that you will receive from your lender for your car loan will be much lower. This is because your lender will view your past transactions with your past credit products to check your creditworthiness. If you have a good and long credit history, the banks will consider you to be reliable and will lend to you at lower interest rates. If you have a bad credit history, the interest rates will be higher as you will be viewed as a risky customer.
3. Loan amount:
If you take a large loan amount, the interest rate that is charged on it will be lower than a small loan amount. So, it is better to take a loan for a luxury car rather than a basic car as the interest rates will vary as per the loan amount that is taken by the customer.
If you are working with a reputed company that is listed with the bank you are borrowing from, then the interest rate that is charged on your car loan will be much lower. This is because the bank will consider you to be capable of repaying your loan amount without defaulting on payments due to steady and regular income. This is beneficial for salaried individuals who have a good monthly income..
5. Relationship with lender:
If you have a good relationship with the lender you are borrowing from, then the interest rates can be negotiated and one can get a lower interest rate. This is why it is advisable to borrow from a bank that you are already an existing customer of. This can help you lower the interest rates on your car loan. Most lenders prefer their existing customers, so they can lower the interest rates if you have a good and long relationship with them.
To apply for a car loan, click here.