Posted ByTechViewIn comparison to petrol and diesel models, EV auto loans are offered at lower interest rates by SBI, Bank of Baroda, and Axis Bank, among others. There is also a tax benefit. However, the scarcity of charging outlets across the nation could act as a temporary impediment. That hasn’t stopped EVs from becoming more and more popular, though.
Many lenders are offering sweeter loan arrangements to prospective car buyers during the holiday season as the popularity of electric cars (EVs) rises in India.
The particular lower interest rates that leading banks, including State Bank of India (SBI), Axis Bank, Bank of Baroda, Canara Bank, and Punjab National Bank, among others, are charging on loans for EVs are pushing more customers to choose these cars.
The government is also contributing to the success of EVs by giving buyers of EVs special tax perks. Many first-time automobile buyers prioritize these eco-friendly vehicles.
Likewise, a lot of people who currently own cars want to switch to electric vehicles.
In addition to being environmentally friendly, EVs are also seen as being cost-effective in the long term because maintaining an electric vehicle is less expensive than keeping gasoline or diesel-powered vehicle.
Affordability has increased because EVs now exist in a range of pricing brackets. At first, it was solely at the top. Electric vehicles are now more reasonably priced thanks to the introduction of new models by Tata Motors and Mahindra Electric Mobility, according to Sumit Bali, Group Executive and Head of Axis Bank’s Payments and Retail Lending.
Here is a look at the EV financing conditions provided by the top banks.
Banks provide EVs with special interest rates.
Loan interest rates for electric vehicles typically range from 10 to 30 basis points (bps) less than those for conventional vehicles (100 bps = 1 percentage point).
For instance, the Bank of Baroda is making it simpler for automobile owners to go green by providing a concessional rate of credit of up to 0.25 percentage points for EVs. Similar to this, SBI is providing discounts of up to 0.20 percentage points on borrowing rates for electric cars for all customer categories, based on the applicants’ credit profiles.
Compared to the interest rates for ordinary auto loans, which are in the range of 7.85 percent to 8.65 percent, SBI Green Car Loans (for electric cars) have rates between 7.95 percent and 8.30 percent.
Lenders have different terms for repaying loans. For instance, at SBI, the minimum and maximum loan repayment terms are three and eight years, respectively. Loans from Axis Bank are available for up to seven years. For EV loans, the majority of banks do not impose prepayment penalties.
According to Adhil Shetty, CEO of BankBazaar.com, the processing charge varies from 0.2 percent to 2 percent of the loan amount, depending on the lender. Instead, some lenders might levy a flat cost that is set at Rs 5,000. In other situations, he continues, lenders may forgo the processing fees throughout the holiday season.
Tax breaks to promote the purchase of EVs
The Government of India (GOI) has introduced exclusive tax incentives to persuade more people to purchase EVs. According to Shetty, Section 80EEB of the Income Tax Act allows for an additional income tax deduction of up to Rs 1.5 lakh on interest paid for EV loans obtained between FY20 and FY23. In addition, he notes that the GST on electric vehicles has decreased from 12 percent to 5 percent, while the tax on conventional automobiles remains at 28 percent.