Tamilnad Mercantile Bank (TMB) Car Loan Interest Rates

Factors Affecting Tamilnad Mercantile Bank Car Loan Interest Rates

1. Base Rate Fluctuations - The applicable car loan interest rate in Tamilnad Mercantile Bank will vary with changes in the Base Rate, since the interest rate is closely interlinked to this factor. Market fluctuations, inflation, repo rate cuts by RBI, Bank's arbitration, etc. can affect the Base Rate. Inflation leads to a rise in interest rates and borrowers have to be prepared for this situation when they avail a car loan.
2. CIBIL Score - A high CIBIL Score is a major factor that could greatly influence the car loan interest rate applicable on your Tamilnad Mercantile Bank Car Loan. Once an application for car loan is submitted, the Bank will check the applicant's credit history and CIBIL score. Even though there are other factors that affects a car loan application, its sanction and provision of an interest rate on the same, CIBIL Score is of primary importance. If the Bank decides to offer the loan to an applicant with an average credit report, then the interest rate applicable on the same might be higher than normal so as to negate the risk involved in doing so.
3. Loan Tenure - The tenure of the car loan as chosen by the borrower is a very significant element that affects his/her car loan interest rate. If you opt for a car loan with a shorter repayment tenure, i.e, less than 36 months, TMB offers a lower interest rate on the loan. However, if you opt for a loan tenure higher than 36 months and lasting up to a maximum period of 60 months, then the interest rate applicable is 0.25% higher than normal. This is because a shorter loan tenure indicates lower risk in defaulting on the loan and quicker repayment of the same.
4. Loan margin - Down payment or percentage of the loan margin paid by the customer for the car also greatly affects the interest rate offered on the loan by the Bank. The higher the down payment the greater is the probability of getting a favorable interest rate on your car loan. This is because this indicates the repayment capacity of the borrower and since the loan amount reduces to a great extent the Bank will be convinced to sanction the loan at a lower rate of interest.

1. Age of the applicant - Age is also an important factor that plays an important role in increasing your chances of getting a lower car loan interest rate from the Tamilnad Mercantile Bank. If the applicant fall within the upper half of the age criteria set by the bank in order to be eligible for the car loan, and have other favorable factors in terms of loan amount and loan tenure, he/she can negotiate with the bank for a lower rate of interest. The reason behind this is that borrowers who are older are a high risk factor in terms of repayment capacity, income stability, etc. so several banks hesitate from providing a loan to them. Even if the loan is offered to this category of applicants the interest rate will be higher.
2. Car Model - In some cases, the model of the car chosen by the borrower might affect the car loan interest rates offered by the bank. Almost all banks stipulate the mandatory hypothecation of the new vehicle as security in exchange of the credit borrowed, the car model will also be considered while making the decision on the interest rate to be offered to the borrower. The resale value of the car as well as its popularity are factors that are considered while weighing the car loan amount to be sanction and the interest rate to be levied on the same. This is because, in the unfortunate event that the borrower is defaulting on the loan, the bank might seize the car and sell it to retrieve the loan amount. In this scenario, the make and model of the car, its affordability, etc. plays an important role.
3. Income - The borrower's income is another factor that is scrutinized thoroughly by the bank in order to arrive at a decision regarding car loan approval and for determining interest rate. The debt-to-income ratio of an applicant will project his/her creditworthiness and repayment capacity. Therefore, applicants who do not have sufficient income to cover his/her existing debt outflows will not get a car loan approval and even if they do, the interest rate on the same will be very high. The credit history of an individual clearly indicates his/her credit outflows and all the repayments due and this can be compared by the Bank against his/her annual income.

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