After slashing its benchmark prime lending rate (BPLR) last week, State Bank of India on Sunday launched a new car loan scheme at 8 per cent interest rate for the first year.

Car buyers can get car loans at reduced rates of 8 per cent per annum fixed for the first year and 10 per cent per annum fixed for the second and third year, the bank said. EMIs (equated monthly installments) for a SBI car loan for Rs 1-lakh will be as low as Rs 1,559 in the first year and Rs 1,647 in the second and third year.

The new SBI rate is much lower than the interest rate of 9.75-14.25 per cent being charged by other banks. “SBI’s new rates will trigger competition among banks to woo customers. High interest rates were preventing prospective car buyers from taking car loans. This will boost the automobile industry as flagging sales will show further improvements,” said an analyst with a broking firm.

The scheme, called SBI Ezee Car Loan Scheme, will come into effect from July 1, which also the SBI foundation day. The interest rate will be reset from the fourth year at the card rate contracted as on date of sanction, depending on the tenure of the loan. The SBI car loan card rates are 0.25-0.75 per cent below the bank’s PLR, the bank said. The SBI Ezee Car Loan Scheme will have a full processing fee waiver during the scheme period.

SBI, which had introduced a special 10 per cent per annum fixed interest rate for the first year from February 23, has now extended it up to September 30. This follows the tremendous response the scheme has evoked, the bank said.

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