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Karnataka Bank is one of the prominent commercial banks in our country and has its headquarters in the southern state of Karnataka. It is the twelfth largest private sector bank in India and is also an ‘A’ Class Scheduled Commercial Bank. The bank has over 11 million customers across the country and offers many products and services that are catered for the benefit of these customers.
Car loans are among the many loans offered by the Karnataka Bank. The car loans of the Bank are known as the KBL Xpress Car Loan. They have many features and benefits that make it a very attractive option for the customers to choose from the various loan products on the market. The rate of interest on the car loans is very competitive and is dependent on many factors.
Given below are the details of the Car Loans of the bank and the rate of interest on such loans.
About Karnataka Bank Car Loan Interest Rates
There are many factors that affect the rate of interest that is levied on any type of loan. These factors are internal as well as external. Let’s look at the various factors affecting your car loan interest rates.
Credit History of the Applicant
The credit history of the applicant refers to the credit score of the applicant. It’s used to determine the repayment capacity of the borrower. The bank considers a person with a higher credit rating to be a lower risk candidate and vice versa. Borrowers with a sound repayment capacity will be able to get a car loan from the bank at a lower rate of interest as compared to a borrower having a lower credit rating.
Type of Interest
There are two types of interests available in the market namely the floating rate of interest and fixed rate of interest. The floating rate of interest is generally cheaper than a fixed rate of interest and hence is more competitive.
Tenure of Loan
The tenure of loans is directly proportional to the rate of interest that is levied on any loan. The shorter tenure usually results in a lower rate of interest charged on such loans and vice versa. A loan having a longer tenure implies an increased risk of the lender and hence is subject to a higher cost or rate of interest.
Type of Vehicle
Another important factor is the type of vehicle that is to be purchased through the loan. The rate of interest is usually lesser in case of new cars as compared to used or old cars.
Margin Money
Margin money is to be provided by all the borrowers as a mandatory requirement for the car loans of the Bank. The amount of margin money to be provided is based on the loan amount to be sanctioned. A higher amount of margin money will result in reduction in the rate of interest as it reduces the risk of the lender.
Inflation
Inflation of a country although being an external factor has quite an impact on the rate of interest that is charged on any loan product. An increase in the rate of inflation results in an increase in the floating rate of interest and vice versa.
The car loans of the bank can be availed for the purpose of buying a new car or second hand or used car. The highlights of the car loan of the bank are tabled below.
Particulars | Details |
Maximum Amount of Loan | For New Cars Lower of,
For Used Cars
|
Rate of Interest | For New Cars
For Used Cars
For Electric Cars
|
Tenure | For New Cars
For Used Cars
|
Margin | For New Cars
For Used Cars
|
Processing Charges | 0.5% of the loan amount.
|
The bank has set many eligibility criteria for a person to be eligible for the KBL Express Car Loan of the Bank. These eligibility criteria are based on the class of persons that are eligible to apply for the loan as well as the age of such applicants.
Age Requirement
The minimum age requirement to be eligible for the KBL Xpress Car Loan is 18 years.
Eligible Persons
The bank has specifically mentioned a list of persons that are eligible to apply for the car loan of the bank. These persons are mentioned below.
An individual paying income tax
Any of the following entities getting the loan in its name or in the name of its executive or managing director or managing partner or managing trustee or president or secretary
Agriculturists that have agricultural properties
NRIs
Applicants need to provide a list of documents that have to be presented at the time of applying for the loan. These documents are a list of KYC documents that are mandatory to complete a loan application.
The details of the documents to be submitted by the applicant are mentioned below.
Identity Proof
Applicant can submit any of the following documents as an identity proof in this regard
Address Proof
Any of the following documents can be considered as an address proof for the purpose of applying a loan
Car Related Documents
Applicants are also required to submit documents relating to the car that has to be purchased out of the loan. These documents are,
Passport Size Photographs
The applicant also needs to provide their recent photographs as part of the documentation process.
Duly filled Application Form
As mentioned above, the highlights of the car loans of the Karnataka Bank showcase that these loans are among the favoured loan products under the car loan segment. These highlights are further discussed below.
Quantum of Loan
The type of vehicle to be bought from the loan determines the amount of loan that can be sanctioned to the borrower. The maximum amount of loan that can be granted under the KBL Xpress Car Loan Scheme is tabled below.
Type of Vehicles | Amount of Loan |
New Car | Lower of,
|
Used Car | Rs. 20,00,000 |
The road price of the vehicle for the above purpose includes the following
Tenure
The tenure of the loans provided under the KBL Xpress Car Loan Scheme of the bank is based on the type of vehicle for which loan is borrowed.
The details of the same are,
Type of Vehicles | Tenure |
New Vehicle | 7 years (84 months) |
Old/ Used Vehicle | 2 years and 10 months (34 months) |
Rate of Interest
The rate of interest for these car loans is dependent on the basis of the type of vehicles that are bought through the loan. The applicable rates of loans of the Karnataka Bank are tabled below.
Type of Vehicle | Rate of Interest |
New Vehicle | 8.49% - 10.38% |
Old/ Used Vehicle | 10.38% |
Electric Vehicle | 8.39% - 10.24% |
Margin
The margin money is to be paid by the borrower and is part of every loan application. The percentage of margin money to be provided by the borrower depends on the type of vehicle. The borrower can provide additional margin money over the minimum requirement as permitted and accepted by the Bank. The minimum margin to be provided b y the borrower is,
Amount of Loan | Margin Money |
New Vehicle | Minimum 15% |
Old/ Used Vehicle | Minimum 25% - 30% |
Security/Collateral
The Bank has a primary hypothecation on the vehicle that is to be purchased out of the loan taken. Karnataka Bank also requires a third party co-obligation or guarantee in certain cases. Customers can get in touch with the bank through their branch or through their customer care to get more information in this regard.
Processing Charges
Karnataka Bank charges nominal processing fees for every car loan processed whether for new vehicles or for used or old vehicles. These processing charges are levied as a percentage of the loan amount subject to a minimum and a maximum amount limit which is excluding any applicable taxes levied at the time of sanctioning the loan. The details of such charges mentioned below.
Processing Charge – 0.5% of the Loan Amount
Minimum Charges – Rs. 2,500
Maximum Charges – Rs. 10,000
1. What is the impact of inflation on the rate of interest of car loans at Karnataka Bank?
Inflation affects the floating rate of interest and is directly proportional to it. Fixed rate of interest does not change due to inflation but does get costlier or cheaper based on the inflation rate.
2. Is a car loan of the bank a secured loan?
Yes. Car loan of the bank is considered to be a secured loan as the vehicle purchased out of the loan is considered to be primary security or collateral against the loan taken. Karnataka Bank further requires a third party guarantee when loan is given to an individual in certain cases.
3. What is the current rate of interest offered by Karnataka bank for its vehicle loans?
The current rate of interest on car loans of Karnataka Bank starts from 8.49% per annum in case of new cars and 8.39% for electric cars. The interest rate for used cars starts from 10.38% per annum.
4. What is the car loan of Karnataka Bank known as?
Car loan of Karnataka Bank is known as KBL Xpress Car Loans.
5. What is EMI Calculator?
EMI calculator is the benefit available on the website of the bank that enables the applicant to get a fair estimate of the proposed EMI to be paid for the loan to be taken.
6. What is the minimum margin money required for a new car loan?
Margin money for new car loan of KBL Xpress Car Loan is 15%.
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