Wish to own a car, why to think so much? Find the means, it is a necessity. Fulfil your needs by applying for an easy car loan and make your dream of owning a car come true. It is an expensive deal therefore, most of the banks/finance companies offer car loans that make your purchase affordable. Just a few documents, verifications and background check can fetch you your dream car. Half of your salary should be saved after paying the monthly instalments to live a life of luxury and comfort.
Eligibility to get a Car loan
Getting a car loan is not difficult as far as you are eligible. Fulfil these basic criteria to get the car loan sanctioned.
- Fixed income: A borrower should have a monthly income be it a salary from a company or profit from a business that will assure his capacity to repay the loan.
- Citizenship: A borrow should have Indian citizenship provided he is taking a loan in India.
- Term of employment: The applicant must have at least completed two years of service in an organisation or should have been running a particular business for two years.
- Age: An applicant should be minimum 21 years of age in order to apply for a loan.
- Registered phone: The applicant must have a landline or postpaid mobile phone registered over the stated address and the applicant must have been an occupant of that address for 2 years.
Types of car loan
Do you really wish to find a variety in the types of car loans? There actually isn’t much because either you want to purchase a new car or you want to purchase a second-hand car. Those are the two possible options. The third option that is offered by some of the banks is a loan against car where you need to mortgage your old car to the bank as collateral and take a loan against it.
|Parameter||New car||Second-hand car|
|Amount of loan||80-100 %||60-80%|
|Duration||Up to 7 years||Up to 5 years|
|Interest rate||8% (assumption)||20%|
|Monthly instalments||Small EMI as duration is long||High EMI as duration is less|
|Down payment||Less as most of the amount is on loan||High amount considering safety first|
New car v/s second hand car loan: There’s a difference!
Loan amount, interest rate and duration of loan differ when you compare new cars to old cars. It is quite natural that new cars are expensive, therefore the car loans against them are also expensive.
Also Read : New Vs Used Car Loan : Which is the Best Option?
Listed are some of the documents that are mandatory to avail a loan, however, more documents can be demanded after analysing your application and background.
- ID proof, age proof (PAN card, Aadhar card, voter’s ID card)
- Completed and signed application form
- Passport sized photograph
- Bank statement for last six months
- Salary slips for last three months in case you are in service
- ITR statements
- Certified income for businessman
- Balance sheet
- Details of the vehicle
It’s all about car loans
Amount of car loan: Banks offer the maximum car loan on the showroom and on road price that is variable and depends on the down payment you give at the time of purchase.
Interest rate on car loan: Different banks offer car loan at different rates. Depending on your tenure of the loan, the interest rate varies. It is wise to compare various offers on car loans and choose the cheapest of all.
Duration of car loan: Depending on your capacity, you can choose the duration of your car loan also known as loan tenure. If you are capable enough to pay large EMIs along with more interest rate, it’s your decision. It is always wise to explore all the possible options and choose the best from them.
Processing fee: To initiate a car loan application and processes associated to it, a bank charges a certain amount. It is usually deducted at the time of disbursing the loan amount but in special cases, this fee can be waived off.
Monthly EMIs: Did you calculate your EMI? If you have already decided on the loan tenure, interest rate and the amount of a car loan. It is easy to know the exact amount you need to shed from your pocket every month in order to own your dream car. There are options available online to calculate your monthly instalments by filling in the basic information such as your loan amount, duration of loan, interest rate and processing fee.
Pre-closures/pre-payment charges: If you choose to repay your loan amount before the stipulated time decided at the time of application, the bank charges extra. In both the cases pre-payment as well as pre-closure, you are liable to pay some fee to the bank. Choosing this option may affect your credit history.
Foreclosure: If you fail to repay your loan amount for any reason, your car will be taken in custody by the bank and will be put for auction to compensate the loan amount.
Get your Car loan sanctioned Easily, Here is how!
Outstanding credit history
A credit score is highly important to get a loan approved easily therefore, have an outstanding credit score to leave no doubt for the lender. Pay your bills on time and monitor your credit report.
Minimise your loan amount and maximise your down payment. Borrowing a less amount isn’t painful as much as the burden you feel with a large sum. Borrow less, worry less!
Fulfil your needs
Explain multiple options and choose the one that fulfils your needs and fits your budget. Don’t make an expensive deal otherwise you may regret your decision later.
Be clear on the terms of a loan
It is important that you should be aware of the terms of loans in every aspect. Know about all the hidden charges, duration and the monthly instalments. The best offer is the lowest EMIs in the shortest span of time.
Must have documents
Have the following documents with you that are income proof, credit report, address proof, vehicle details and vehicle insurance. If you have these documents all ready with you, it is least likely that your loan gets rejected.
Why taking a car loan is a better option?
Are you scared of taking loans, well, it is not a bad idea always provided you make an evaluated move. Whenever you think of buying a loan ask the lender why should you take it? What are the benefits and then look for your satisfactory answers.
- It is simpler as compared to other loans.
- You might take a better car thinking you don’t have to give the entire amount in one go.
- You can be an owner of your car sooner than you think.
- Since usual offers are of fixed interest rates, therefore you know the fixed amount that is going to be laid from your pocket. You can plan your expenses accordingly.
- It helps you achieve the unachievable. You might not believe that you too could afford a car but with such offers available in the market, now you can!
Hope this piece of information was all you wanted to know about car loans if not explore more, learn more.