Travelling by your own car has now become a norm, where a large part of the population owns a car for their day to day travel, which includes travel to work and back home. A car as a utility vehicle makes your travel convenient, and free from trouble. Not only that, a car adds to your status in society. Yet, people who really need a car seldom have the luxury of owning one. This luxury, actually a comfort in today's life, now comes to you in the form of financial assistance for you to purchase your own car. Banks and financial institutions have increased financing automobile purchases, both new and old, and this makes life easy.
Finance in the form of a Car Loan comes to you very easily and conveniently, since repayment does not have to be made in large chunks of money, but can be eased over several years where repayment takes place in Equated Monthly Instalments. Normally, if you go to purchase a car, you may have to dip into your savings, and why must you do that when you have finance offered by lender at affordable rates of interest. As we take you through car financing basic before you jump in to buy a car, remember, options are many, but seeking the right option that suits your need depends on you.
The basic eligibility particulars for a car loan are as follows:
To prove your eligibility, you have to furnish documentation to make sure the loan process gets carried out smoothly, and you get your approval in time to purchase a vehicle of your choice. Here are some mandatory documents that you must keep handy while applying for a Car Loan.
You may go about the process of availing a car loan in the following manner.
Going beyond budgeted expenditure cannot be afforded. Estimate your expenses to the extent of accuracy for a clear picture of how much you need to own a car.
Plan your Equated Monthly Instalments with the use of an online Car Loan EMI Calculator based on the parameters, namely Principal Loan Amount, Interest Rate, Loan Tenure.
Get your car loan approved before you go shopping for a car of your choice. Once approved you know where you stand financially.
If you've done your research on the car you want to purchase, good, otherwise, start and look for a car that fits your budget, and expectations.
Festive discounts, seasonal offers, and other such promotions take place the year around. Don't forget to take the goodies these festivities have to offer.
Car loans are available both online and offline, but if you choose to apply online, follow the instructions on the portal, and follow the instructions. The following are the steps involved in the application and approval process of a car loan.
Credit score is important to you credibility, as lenders decide your creditworthiness before approval of your car loan.
Take your application form seriously, and fill out the details as required accurately so that you don't have wait too long.
The lending institutions will then check to verify your credentials, your eligibility, and ability to repay the loan.
A car loan approval takes general 1 to 5 days, this however varies from lender to lender depending on factors pertaining to approval.
Lenders generally make car loan disbursals in one of the two approved ways. Either your lender will transfer the amount into your bank account, or your loan amount will be directly paid to your car dealer.
When you take a car loan, you decide the model of the car first, after which, the lender gives you a figure to be funded on the price of the car model. The car then has to be insured, and hypothecated for safety. The lender then decides the interest rate, and the process of the EMI along with the loan tenure.
The car has a product of an approved Indian car manufacturer, or any foreign car manufacturer. The funding of the purchases remains at the discretion of the lender.
Banks and NBFCs generally offer car loan at interest rates varying from 10% p.a. to 18% p.a. Interest rates are dependent on factors that relate to loan tenures, loan values, borrower profiles, etc.
The lender decides the amount of car loan based on the loan tenure, loan amount, and the interest rate you've agreed upon. However, you may choose the best EMI amount after calculating the instalment on an online Car Loan EMI Calculator.
Car loan tenures generally range from 1 year to 7 years based on your ability to repay. Some lender may even extend your loan tenure depending on your case.
A down payment indicates the payment made from your side excluding the amount of your car loan. Higher the down payment, lower the outstanding car loan balance, and vice versa.
Loan processing fees, pre-closure or foreclosure charges, stamp duty, late payment fees, etc., are some of the miscellaneous charges associated with a car loan.
Consider a few factors mentioned below before availing a car loan for the first time.
Choosing a short repayment tenure could be a good option, since you close the loan fast to reduce debt burden.
Evaluate your EMI repayment ability to adjust your EMIs accordingly to make sure you don't fall short of money for expenses.
Additional fees and charges are associated with car loans, and these must be kept in mind before you make a decision. For example, repaying your car loan earlier than maturity may attract a foreclosure charge at the discretion of your lender.
Low credit score are generally a no-no from lenders and this might make you feel a little uneasy about securing a car loan for the first time. You may bypass this criterion by applying for a loan jointly or with a guarantor, or by offering to make a larger down payment.
Research and compare loan products offered by different lenders. This will make the process and choice much easier, since you know your budgets best, and you know what you want from your money.
A guarantor could be anybody among your family and friends with a good financial, and good credit records. This will help you get a car loan quickly.