which factors affect car loan interest rate

Owning a car is one of the valuable investments for most of us. Making decisions related to the color and model of a car is quite exciting, but coming up with the required amount of funds is a key aspect to be considered with the rising rate of the four wheelers.

Going with the increasing demand, there are host of banks and NBFCs offering affordable car loan schemes for both salaried and self-employed individuals to help them take home their dream car. One of the schemes is Dena bank car loan which is an ideal financial solution even for a low-income class family to own a car.  

Dena bank, earlier known as Devkaran Nanjee Banking Company Limited, is one of the leading Public sector banks of the country. It was founded by the family of Devkaran Nanjee in the year 1938 and has its head office in Mumbai. The bank offers car loan to the individuals and to Partnership firms, Proprietary Firms, Corporate etc. for the purpose purchasing new or used cars.

Factors that affects Dena bank car loan interest rate-

There are several factors that affect the loan amount as well the rate of interest charged on the borrowed amount. Some of these are described below- 

1. Loan tenure- It is the most important factor that you have to consider. As, if the loan tenure is longer, it indicates the higher risk of default payments to the bank. So, to negate this risk, the bank might increase the interest rate applicable on the loan. And, by going for lower loan tenure, the bank will be assured of quicker repayment, so, here you can expect a lower interest rate.
2. Applicant’s Income- The monthly income of the applicant also plays a vital role in deciding the rate of interest on the car loan. The applicants with the higher income are more creditworthy since, they have a higher repayment capability. So, in this case you can negotiate with the bank to lower the interest rate.
3. Credit history- The CIBIL or credit score of an individual is the reflection of his or her credit worthiness. For instance, if applicant has a good CIBIL score, then he or she is considered more creditworthy and thereby, the chances of getting the car loan at lower rate is more than those who has not a good credit score. 
4. Down payment- The percentage of the loan margin or the down payment that has to be paid by the applicant also has an auxiliary influence on the rate of interest of the car loan. The down payment and the rate of interest are inversely proportional to each other i.e., the higher the down payment, the lower will be the interest rate and vice versa.

 For more details, visit https://www.applykaroo.com/loans/dena-bank-car-loan.