Car Loan-SBI Float rate v/s HDFC fixed rate

POSTED BY Ravi Nambiar ON November 9, 2011 12:32 am COMMENTS (3)

Hello Friends,

I am planning to buy a Hyundai i20 very soon and wanted to get your advice on car loans.
I am in a dilemma to be honest on fixed rate v/s float rate.I am sure I am not the only one out there.:)
I am looking at a longer tenure such as 5 yrs or more and plan to repay the loan back fully in the next 2 years.However would also like to have a lower EMI for the first year.

I have 2 offers with me.
1.SBI car loan which gives me finance upto 85% off On road price.
Rate of interest is 11.25%(floating)
Pre-Payment charge: NIL(can repay anytime)
Daily reducing balance

2.HDFC bank loan which gives me finance upto 85% off Ex showroom price(dampener for me!)
Rate of interest is 11.00%(fixed)
Pre payment charge : 1.5%(after 2 yrs).before 2 years is 6%.
Monthly reducing balance method.

Please can you suggest me what offer I should go with.


3 replies on this article “Car Loan-SBI Float rate v/s HDFC fixed rate”

  1. Ravi Nambiar says:

    Thanks a lot Ashal and Shreyas….this seals it for me…

  2. shreyas s says:

    Hi Ravi,

    Congratulations on the car! I myself purchased a car recently and was faced with the same dilemma. However I went with the SBI option with the same offer as you have mentioned because I reasoned out the following advantages ( for me):

    1. I got a loan for 84 months (7 years) which was not available with HDFC. Since there are no pre closure penalties, I intend to pay more and close it out in the next 2-3 years. Even otherwise, the EMI works out less in this case, thereby it will help me in case I go for other loans in the future say a home loan.

    2. From reviews and what people advised me, dealing with SBI is more hassle free than HDFC/Axis/ICICI etc. esp. during pre closure.

    3. The differential saving in EMI because of the .25% (for the first year as you have mentioned) should not be a deal breaker in my opinion. In future, should interest rates rise exhorbitantly, you can always put more money and preclose with SBI.

    All the best

  3. ashal jauhari says:

    Dear Ravi, I w’d ask you to opt for an special car loan offering from SBI. SBI Advantage Car loan. You may avail term of 3-4-5-7 years as per your choice & cashflow position.

    The good part is – you ‘ll be able to save a lot of money on the interest part while repaying the car loan early yet having the liquidity of your money.

    Here is some detail of this loan.

    1. the loan amount should be more than 5L Rs. (As you are opting i20, I think you are already clearing this benchmark).

    2. An overdraft account ‘ll be open for you with the branch of your choice. Each month whatever, extra money you are parking in this OD account ‘ll be treated as repayment of loan for the days, money lies in the OD account. thus the interest ‘ll be calculated only on the adjusted outstanding loan amount.

    3. In case of need, you may withdraw that extra amount from OD account.

    For details on this loan scheme, please contact nearest branch. Some basic info is available in the below link –



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