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Fixed or floating rate? Choose floating-rate car loan if you plan to prepay

With interest rates peaking, you could benefit from a decline in them

Auto finance fortunes are linked to the automobile industry which had plant closures in the June quarter

Bindisha Sarang   
Car sales are surging, and so are car loans. According to Reserve Bank of India (RBI) data, vehicle loans grew 22.1 per cent year-on-year in December. Besides getting a good bargain on the car, select the loan carefully to optimise your total purchase cost.
Fixed or floating rate?
Private banks usually offer fixed-rate car loans while public-sector lenders usually offer floating rates.
Gaurav Aggarwal, senior director, Paisabazaar, says, “Fixed-rate car loans are suited for those who prefer a fixed repayment obligation and are content with the current rates.”
While fixed-rate loans offer peace of mind, they are usually costlier than floating-rate loans. Also, at

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First Published: Jan 19 2023 | 9:52 PM IST

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