car loan

Having a car is a dream of almost every one of us. It not only serves the purpose of transportation, but also acts as a fixed asset in the property. Nowadays, a car has become a necessity rather than a luxury. Many professionals have to travel a long distance from their houses to workplaces. In such cases, car becomes an easy and time-saving mode of transportation. Buying your own car or a used one is not difficult now. You can simply search for the best car loan and fulfill your dream of having a vehicle. Since a shorter term loan, such as a 3 year loan, provides a lower rate of interest, majority of people prefer a shorter term of loans. Car loan basically serves the individuals who are either salaried or self-employed. The vehicle loans are available for fixed tenure at variable interest rates. There are two types of interests available: fixed and floating. Generally, it has been observed that the interest rates on car loans 2019 vary often if compared to other loans. Also, they are considered as secured loans. Thus, lenders are ready to take more risks while offering this amount to the customer. Below are the factors which affect the car loan: compare-car-loans-apply: Income of the customer ( annual and monthly)– The salaried professionals can obtain loan around three times of their annual income, while self employed persons can apply for the amount five to six times of their annual income. Prices of the cars– You have to check whether the price of the car is covered with the loan or not. Usually, 80-90% price is covered by the bank loan. However, you must calculate the car loan emi amount you are eligible to obtain and the actual price of the car. Market interest rates and other charges– The availability of the car loan will depend upon the market demand for the same. It also varies according to the processing fees, charges and processing requirements etc. Car Loan Interest Rate Comparison: 1. Processing fees – Most banks charge processing fees of Rs. 250 to up to Rs. 20,000. To get the lowest fee, comparison of vehicle loan rates, offers and cashback applying online through MyLoanCare. 2.Insurance premium – It is mandatory to take a car insurance policy to cover any damages to the car in case of an accident. However, the coverage and premium of various insurance policies can be different from each other. The insurance policy bundled with your car purchase might not necessarily be the best insurance policy. Hence, it is advisable to compare the insurance terms, before choosing an insurance policy for your car. 3.Prepayment and foreclosure – When you want to repay a partial amount of loan before time, it is called part prepayment. In case you decide to pay the entire loan amount before time, it is called foreclosure. Banks typically levy prepayment or foreclosure charges in such situations and these can range from Nil to Upto 5%. So, check carefully if the low interest rate car loan you get comes with high prepayment or foreclosure charges. Note that some loans cannot be repaid before time. 4.Down payment – Banks offer car loan either at 80% of on-road price or 100% of ex-showroom price. However, 80% of on-road is almost equivalent to 95% of ex-showroom price. You are advised to fund maximum down payment as it reduces your burden of high monthly payments. Lowest EMI for Car Finance: EMI is the amount that you pay every month to the bank or financial institution in order to repay your loan. EMI is composed of both principal amount and interest component. Interest component on your EMI is higher in early months and reduced with each EMI. Car Loan EMI Calculator helps you to calculate your monthly EMI at desired interest rate for a particular tenure. Car Loan EMI depends upon loan amount, interest rate and loan tenure: 1.Loan amount – If you apply for a high loan amount, then your EMI will be high. 2.Interest rate – Higher interest rate on your loan leads to high amount of EMI. 3.Loan tenure – EMI reduces in case of high loan tenure. 5 questions to ask your Car Loan agent 1.What is the loan amount eligibility based on your income and the car or SUV or MUV model you are planning to buy? Is the loan available on ex-showroom price or on the road price? 2.What is the EMI amount and loan tenure per Rs. 1 lakh loan amount? 3.What are the processing charges payable? 4.Can you make prepayment of the vehicle loan? If yes, are there are charges and restrictions on when and how much you can pay? 5.What is the interest rate? Is it a flat rate or reducing rate? Is the EMI payable in advance or at end of month? Steps to take a car loan: 1.Credit Score: As is obvious, your credit score is very crucial in determining what rate you’re offered on your loan and whether you will even get the loan in the first place! Your credit score is based on your credit report of the past. It’s a good idea to know your credit score. 2.Review your Budget: Figure out how much you can realistically afford to pay each month as your loan EMI. Vehicle loans come in short to long tenures wherein longer the term is, lesser is your monthly payment. But a longer term means you owe more than the vehicle is worth for longer. 3.Factor Insurance and other costs: Insurance costs and maintenance costs are not covered in your loan amount. It is, however, very important to decide on those funds. Consult with your insurance agent and the lender both, on how the total cost of insurance, maintenance and monthly EMI affect your budget. 4.Pre-Approval: It is advised to check with various different sources for the best deal for you. A pre-approval will work for you for a certain time period and for a certain amount of money. You can spend up to that pre-approved amount on your car. Even if you do not have a great credit score, you can still get the loan but for a higher interest rate. It should be take care of that the whole process in over in 14 days. Some credit scorers might penalize you for too many inquiries into your credit history. 5.Choosing Vehicle: Once pre-approved you can go ahead and choose a car of your dreams. One of the benefits of getting pre-approved is that you can focus on negotiating the best deal. The dealers may try to talk you into longer termed loans which will cost you more in the long run. In case of a used car, first confirm that the loan you apply covers the option of buying a car from a private party, generally, there are restrictions on the age of the used car and interest may be a little higher Paperwork: Once the vehicle is chosen, price negotiated and the budget is decided, the lender would require your documents to finalize the sale. The add-ons such as extended warranty would be offered to you by the auto dealer. These must be carefully researched upon. 6.Paying off: After the sale, the payment schedule is informed to you. It is advised to have an account online so that you can check your balance and make payments with convenience Is CIBIL Score for car loan important? CIBIL score is very important. Good CIBIL score indicates good repayment record and hence banks can offer you higher loan amount at low rate of interest for car loan. Bad CIBIL Score will result in either loan at higher interest rate or rejection of the loan application. So, make all your payments on time and maintain your CIBIL in order to get best car loan rates. Thanks, for reading this article and Hope It Clears all your doubts and In Future you get a best deal for your Car Loan.

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