SBI sets Rs50,000 per month earnings base for car loans

The State Bank of India (SBI), the nation's largest lender, has fixed a minimum monthly earning base of Rs50,000 for customers to access its car loans.

This means that anyone whose earnings are below Rs50,000 per month must forget about getting an SBI car loan.

SBI, the largest public sector lender in the country, is looking for ways at reducing credit default risk and the hike in loan eligibility base for individuals to Rs6 lakh per year is a move aimed at this.

SBI also has the largest share of non-performing loans among public sector banks in the country.

SBI currently offers car loans at an interest rate of 10.45 per cent, the lowest rate provided by any bank. The bank also charges 0.51 per cent of the loan amount (or a minimum of Rs1,020 and maximum of Rs10,200) towards the processing fee.

With rising fuel costs and rising car prices, SBI expects car buyers to default on loan repayment.

Also, under the present economic scenario, there is some uncertainty relating to jobs and businesses are postponing hiring, adding to the prevailing uncertainty.