After nudging us to buy homes at special rates, banks now want us to buy cars because they think that 10% special rate as against 10.25% for men will really encourage us to take car loans. Really?
The State Bank of India, under its scheme “Her Ghar Her Car” has reduced car loan rates for women from 10.25% to 10%. It will continue to lend to men at 10.25%. It has also waived off the processing fees (industry norm is to charge a fee of Rs 2500-Rs 6000 depending on the amount of the loan)
Without any gender preferences, for a 7 year tenure, ICICI bank offers car loans at 10.75% , HDFC Bank offers it at 10-10.58% and Axis Bank offers it at 11.50-12.50%. These banks levy a processing fees in the range of Rs 2500–Rs 6000.
How much do you really save?
As the bank’s website shows, you just end up saving Rs 13 (for every Rs 1 lakh loan of 7 year tenure) if you avail of this reduced car loan rates for women. So at 10% you pay an EMI of Rs 1660, whereas men pay Rs 1673 for every Rs 1 lakh loan for a 7 year tenure. On a Rs 5 lakh loan, you save Rs 65.
Not that this isn’t a saving for you, but as we have always maintained, that financial products which carry a label “specially for women” may not really save you a big buck. We have said this repeatedly about special home loans for women as well.
Therefore don’t let just the special loan rates decide your lender.Compare the prepayment charge or the processing fee. For instance SBI car loan may make sense not only because of its cheaper rates for women but for the zero processing fee, as mentioned on its website.
PS: This article is meant to help you take informed decisions. it would be advisable if you compare the loan terms as per your requirements.