What is a car loan?
There was a time when owning a car was a luxury and everyone looked up to you if you had a car. However in the current generation, owning a car is no more a luxury and rather a necessity. To fulfil this necessity there are a lot of car loan lenders emerging.
You cannot imagine living without a car as it would cause huge amount of issues in your professional and social life. Due to new technologies and rise in the standard of living, prices of cars are on the rise. It becomes hard for a middle class Indian to purchase a car out of one’s savings. Paying a huge sum of cash upfront would not just be tough but would also put you under the radar of the Income Tax Department.
Availing a car loan doesn’t demand you any collateral as the car itself is secured against the loan and you also get to use the car as you are paying off the loan.
Loans can be availed not only for brand new cars but also for used cars
Why avail car loan?
Loan tenure:
A bank provides flexible tenure of 1-7 years to repay car loan amount in regular EMI’s
Easy documentation:
Car loans are easy to avail with easy documentation and gives out clear instructions about the car loan approval and sanction process
Special discounts:
During festive seasons banks offer special discounts for availing car loans. Woman borrowers are also offered discount by most banks
Loan amount:
Some banks offer 100% of the value of the car as loan amount. Borrower offer loans up to 1.5 Cr
Rate of interest:
Car loans in India are generally offered at a fixed rate of interest, this keeps you assured of the expense you have to make on your car loan EMI and accordingly plan your monthly budget. Rate of interest is generally around 10-15%
Credit score:
Ideally you need to have a credit score of above 750. If your credit score is too low your loan application might get rejected.
Car loan for a used car:
Car loans are availed not only for buying new cars but also buying second hand cars. The cost of buying a used car is cheaper, so the loan amount required will be lower and so will the EMI. In a used car loan, there are higher costs for repairing in case of any damages and there might be additional re-registration cost which is not covered in the car loan.