Bank of India (BOI) Car Loan Interest Rates

Factors Affecting Bank of India Car Loan Interest Rates

Some of the important factors affecting the Bank of India car loans have been explained below. Banks might sanction or reject applications based on these factors.

1. Down Payment - The down payment amount given by a customer also defines the interest rate that the bank will be offering for a car loan. The higher the down payment amount, the lower the interest rate and vice versa. Customers should always pay a good lump sum before they start their car loan. There are dual benefits attached to this, the first being that the interest rate is lowered and the second being that the monthly instalment amount also comes down considerably.

1. Income to Debt Ratio- The income to debt ratio translates to the number of debts that a borrower has, to the income earned on an annual basis. Banks consider this to be a major criterion when they sanction a car loan. If the income to debt ratio is good for an applicant, then the lender will give better interest rates.

1. Loan Tenure - Lending institutions might offer low-interest rates for car loans with shorter loan tenures. Since the borrower has made a huge lump sum down payment, the procured loan amount will be lower, thereby shortening the loan tenure. Shorter loan tenures ensure that customers are able to save on monthly instalments through the tenure and they do not have to bear the huge burden of paying extra interest charges.

1. Market Fluctuations - The interest rate might vary based on market fluctuations and changes too. For example, if the Reserve Bank of India lowers its repo rate, then lending institutions might offer relatively lower interest rates. This would benefit the customers and it would be an ideal time to avail a car loan. Inflation rate also contributes to the increase and decrease of a car loan interest rate.

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