Tamilnad Mercantile Bank Car Loan Interest Rates

What are the key features of car loans from TMB?

The key features of car loans of TMB are tabled below.

These features mentioned above are discussed further hereunder. 

Quantum of Loan

Tamilnad Mercantile Bank provides car loan to the extent of up to 85% of the value of the vehicle for loan taken to purchase new cars and 70% of the value of the vehicle for purchase of used cars. The maximum amount of loan that can be provided by the bank for new cars or used cars is tabled below.

Rate of Interest

Tamilnad Mercantile Bank Car Loans are based on the RLLR and are floating rates of interest. These rates vary for the loans to purchase of new cars or second hand cars. The current applicable rates levied by the Bank for its Car loans are tabled below.

The bank has different rates of interest in case of vehicle loans for educational Institutions or for Corporate. The details of the same can be available by contacting the bank through its nearest branch or through the customer care service of the bank.

Tenure

The repayment period of car loan of Tamilnad Mercantile Bank does not vary for the new car loans or used car loans. The maximum period of repayment or tenure of TMB car Loans is 5 years (60 monthly EMIs).

Margin

Margin money is to be mandatorily paid by a borrower for Tamilnad Mercantile Bank Car Loan. It is considered as a part of the loan application process. The bank has specified the quantum of margin money to be provided in case of purchase of new cars and used cars. The minimum margin money required by the Bank for its car loans is tabled below.

Security

The primary security of the loan provided by the bank is the vehicle purchased out of loan. Bank has the hypothecation charge on vehicles which has to be duly registered with the Regional Transport Authority and recorded in the RC book.  A duplicate copy of the RC book and Keys have to be kept in record with the Bank.

TMB also requires an additional guarantee for its car loans apart from the primary security mentioned above. In case of the borrower being a HUF, the guarantee of male members is required. In case of individual borrowers, the guarantee of spouse or father of the borrower is required. In other cases, the guarantee of Partner/ Director/ Trustee is required which can be waived based on the sound repayment capacity of the borrower as ascertained by the concerning authority.

Processing fees

Tamilnad Mercantile Bank levies 1% of the loan amount as processing fees. These charges are levied at the time of sanction of loan and do not have any maximum ceiling on the amount that is charged as processing fees for the car loans.

Part payment or Foreclosure Charges

Tamilnad Mercantile Bank does not levy any prepayment charges in case of the car loan being pre-paid by borrowers. In case of takeover of loan by other banks, the applicable charges on prepayment of loan is 0.25% of amount prepaid.

What are the common factors influencing the rate of interest of a car loan?

There are many external and internal factors that impact the final applicable interest rates levied on the car loan product of any bank. Some of such factors are discussed below.

Credit Profile of the Applicant 

Credit profile of the applicant is the credit score of the applicant long with their credit history and repaying capacity. A borrower with a sound credit history implies a good credit rating along with the good repayment capacity of such borrower. Such borrower is thereby considered to be a lower risk candidate as compared to others so the rate of interest applicable is lower as against an applicant having a lower credit rating.

Inflation

Inflation is a major external factor that directly impacts the rate of interest on any loan product. An increase in the rate of inflation results in a direct increase in the floating rate of interest on any loan product and vice versa. Also fixed rates may not change directly but does end up becoming cheaper or costlier based on the changes in the inflation rate.

Type of Vehicle

Type of vehicle or the dealer of the vehicle from whom the borrower buys the vehicle can also influence the rate of interest on such car finance.  Used cars carry a higher interest rate as compared to new cars. Another factor related to the dealer is that some dealers provide many schemes that offer concessions or discounts or festival bonuses in interest rate on certain occasions. This improves the product features and which can prove to be beneficial for the borrower.

Type of Interest

Tamilnad Mercantile Bank provides car loans on floating rate of interest which is generally lower as compared to the fixed rate of interest.

Tenure of Loan

Repayment period or tenure of a loan product is crucial in determining the rate of interest that is charged on such product. A longer tenure increases the risk of default for the lender and hence carries a higher interest rate and vice versa.

Margin Money

A borrower has to provide the margin money as per the guidelines of the Bank. The amount specified by the bank is the minimum margin money to be provided by the borrower. When the borrower provides increased margin money higher than the amount as specified by the bank, the need for external finance reduces thereby reducing the risk and eventually the interest rate on such loan.

FAQs – Tamilnad Mercantile Bank – Car Loan Interest Rates