User Sign Up   |   Welcome Guest  |  Login  
Home » Articles


Everything you want to know about cars at a glance. Articles that cover what is hot and what is not! Read exciting happening in the Indian and Global Car industry, tips to help you and more...

Latest Articles
More Old Articles
Rate This Page

Nationalised or Private Bank – which is better for car loans?

Almost 85 percent of auto sales in India are supported by loans. Nearly 40 percent of them are car buyers and the percentage is only growing. Most buyers in India are first time car owners. They will easily choose to take a loan from bank where they have an account, or private banks that advertise aggressively, but the public sector banks are really bad while offering car loans. We cannot say that one is definitely better than the other, as each of them have their own advantages and disadvantages, difference between them is striking.

Private Banks

First let us look at private banks, which are very popular in urban and semi-urban areas. They are known for their customer friendly attitude and little documentation. Loans get released in few days, sometimes within two days. Their network ensures easy buying, registering and insuring a car. The rate of interests for used cars is cheaper when compared to nationalised banks, but the same for new cars is very high. Private banks have a complicated system of fines, in case of delay in re-payment, they charge compound interest rates which can escalate the EMI by a huge margin.

Nationalised Banks

The nationalised banks, being government agencies, go into a lot of paperwork before passing an application. The lengthy processing time and red-tapism force applicants to loose hope. But it is not the same in all cases. Nationalised banks, offer low interest rates for new cars. But their interest rate for purchase of used cars is very high. They do not charge any fine for delay in re-payment. All their activities are accountable to the higher authorities who can be approached for redressal of grievances, if any.

Some of the draw back are – such banks only entertain customers who have large bank balances, and insufficient balance is enough ground for rejecting a loan application. Loans are sanctioned against only if the applicant is able to offer guarantors or collateral security of a higher value. Even after all this the borrower cannot be sure that the required sum will be sanctioned.

Deciding on which of them is a better one for car loans is difficult. Many factors involve in finalising the right bank to approach. This article is just a broad outline of the differences between them.