Union Bank Car Loan Interest Rates

Factors affecting Union Bank of India Car Loan Interest Rates

Some of the significant factors that can affect Union Bank of India car loans have been explained below. Banks might sanction or reject applications based on these factors:

1. Loan Tenure: Lenders might offer low interest rates for car loans with shorter loan tenures. If the borrower makes a big lump-sum down payment, the loan amount will be lower, thereby shortening the loan tenure. Shorter loan tenures ensure that customers are able to save on monthly installments through the tenure and they do not have to bear the burden of paying high interest charges for a long period.
2. Down Payment: The down payment made 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 second being that the monthly installment amount also comes down considerably.
3. Income-to-Debt Ratio: The income-to-debt ratio refers to the debts of a borrower divided by his or her 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.
4. Market Fluctuations: The interest rate can vary based on market fluctuations. 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.
5. Credit score: Prospective borrowers must always keep in mind that their CIBIL scores play an integral part in determining the interest rate for their car loans. All applicants should have regular payment cycles and should not be overburdened by liabilities. Holding a good score typically ensures that the bank gives the lowest interest rates. Banks generally increase the interest rate significantly for customers with a low credit score.

A good credit score can help you secure lower interest rates on loans and credit cards.

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