As the new year began, three banks in the country surprised their customers by increasing the interest rates on car loans. The State Bank of India (SBI), the largest public sector bank, has raised the interest rate on car loans by 0.25%. Individuals with high CIBIL scores will now be charged 8.85% interest on car loans, up from the previous rate of 8.65%.
Bank of Baroda has increased the interest rate on car loans from 8.7% to 8.8% and has also introduced a processing fee for such loans. Union Bank has also announced an increase in interest rates on car loans, raising interest rates from 8.75% to 9.15%.
It's important to note that this decision will not impact home loan interest rates. Generally, banks adjust the Marginal Cost Lending Rate (MCLR) following changes in the repo rate. The Reserve Bank of India (RBI) has not made any changes to the repo rate since February 2023, it is a notable factor in these banking decisions.