EV loan guide India 2024: interest rates, tax benefits, and subsidies explained

Thinking of going electric but worried about the cost? You're not alone. As EVs gain popularity in India, more people are turning to EV loans to make their green dreams a reality. Let's break down everything you need to know about EV loans in India, from interest rates and tax benefits to subsidies and EMI calculations.

EV loan interest rates in India: what to expect in 2024

First things first - what kind of interest rates are we looking at for EV loans in India? Here's the lowdown:

1. Average range: typically between 7.25% to 11.5% per annum

2. Factors affecting rates:

Your credit score (higher score = lower rates)
Loan tenure (shorter tenure often means lower rates)
Vehicle type (cars vs scooters)
Your employment status and income

Pro tip: some Indian banks offer lower rates for EVs compared to petrol vehicles. Always shop around!

EV loan tax benefits: more savings in your pocket

Here's some good news - your EV loan can lead to tax savings too! Check out these EV loan tax benefits in India:

1. Section 80eeb deduction:

Claim up to ₹1.5 lakhs as a deduction on interest paid for EV loans
Valid for loans taken between April 1, 2019, and March 31, 2025

2. GST benefits:

Only 5% GST on electric vehicles (compared to 28% on petrol vehicles)
Result? Lower loan amounts and smaller EMIs

EV loan calculator: crunch those numbers

Before you sign on the dotted line, use an EV loan calculator to understand your EMIs.

Here's how:

a. Input these details:

Loan amount
Interest rate
Loan tenure

b. The calculator will show you:

Your monthly EMI
Total interest you'll pay
Total amount you'll pay over the loan tenure

Pro tip: most Indian banks offer free EV loan calculators on their websites. Use them to compare different scenarios.

EV loan subsidy in India: government boost

The Indian government is seriously pushing for EV adoption. Check out these subsidies:

1. Fame ii scheme:

Direct subsidies on EV purchases
Up to ₹1.5 lakhs for electric cars
Up to ₹30,000 for electric two-wheelers

2. State-specific subsidies:

Many states offer extra subsidies on top of central benefits
For example, Delhi offers up to ₹1.5 lakhs additional subsidy on electric cars

Note: these subsidies directly reduce your loan amount, leading to lower EMIs and less interest.

Tata Tiago EV loan EMI calculator: let's get real

Let's take a popular EV, the Tata Tiago EV, and crunch some real numbers:

Assumptions:

Ex-showroom price: ₹8.69 lakhs (base model)
Down payment: 20% (₹1.74 lakhs)
Loan amount: ₹6.95 lakhs
Interest rate: 8.5% p.a.
Tenure: 5 years

Using an EV loan calculator, we get:

Monthly EMI: about ₹14,300
Total interest payable: ₹1.63 lakhs
Total amount payable: ₹8.58 lakhs

Remember, your actual numbers may vary based on specific loan terms and applicable subsidies.

EV loan rates: how to compare smartly

When you're shopping for EV loans in India, here's what to look at:

1. Annual percentage rate (APR): this includes both interest and fees, giving you the real picture.

2. Fixed vs. Floating rates: some Indian banks offer floating rates for EV loans. They might start lower but can change over time.

3. Processing fees: don't forget to factor these in when comparing offers.

4. Pre-payment penalties: check if there are charges for paying off your loan early

Loan for EV scooter: financing your electric ride

Looking at an electric scooter? Here's what you need to know about loans:

1. Lower loan amounts: usually range from ₹50,000 to ₹1.5 lakhs

2. Shorter tenure: typically 2-3 years, compared to 5-7 years for cars

3. Quicker processing: due to lower amounts, approvals are often faster

4. Specific subsidies: check for two-wheeler subsidies under fame ii and your state policies

Loan for EV charging stations: powering the infrastructure

For entrepreneurs looking to set up EV charging stations in India, here's the scoop on loans:

Higher loan amounts: often in crores, depending on your project scale

Longer tenures: typically 7-15 years

Government support: various schemes in India support charging infrastructure development

As India shifts gears towards electric mobility, understanding EV loans is crucial. From attractive interest rates and tax benefits to substantial subsidies, there are plenty of reasons to go electric. Remember to:

Compare loan offers from multiple Indian lenders
Factor in all applicable subsidies and tax benefits
Use EV loan calculators to understand your EMIs
Consider the total cost of ownership, including potential savings on fuel and maintenance

ARN: Zuno/Blog/DM/EV loan guide India 2024: interest rates, tax benefits, and subsidies explained/09/24/03

Disclaimer

Zuno General Insurance Limited does not assume any liability for actions taken based on the information contained in this blog. All insurance products and services are subject to the terms and conditions of the specific policy. Coverage and pricing may vary based on individual circumstances and eligibility.