Bank of Baroda on Monday announced a 25 basis points (bps) reduction in its car loan interest rates from 7.25% to 7% per annum.

The state-run bank has also reduced processing charges to a flat Rs 1,500  (plus GST) for a limited period till June end this year.

The new rate and the concessional processing charges are applicable for purchase of a new car. This rate offering is linked to a borrower's credit profile, the bank said in a release.

For pre-owned cars and two-wheeler loans, the existing rate of interest continues.

Last month, Bank of Baroda cut interest rate on home loans by 25 basis points to 6.5% till end of June next month. The new home loan rates are linked to a borrower’s credit profile.

“While the pandemic and subsequent lockdown impacted the auto segment, we have since seen a steady rise in demand for car loans as the economy has opened up and people are keen to travel in their own vehicles. The drop in the Baroda car loan interest rate and reduction in processing charges will make it easier and more affordable for consumers to buy a car of their choice," said Bank of Baroda general manager (mortgages & other retail assets) HT Solanki.