What is Car loan?
Car not only makes your life comfortable, but also reduces many difficulties. Coming to the office while battling public transport or going out for a weekend trip, everything becomes very easy.
Earlier, buying a car was a big deal for anyone, as a lump sum amount had to be spent for it, but now it has become very easy due to the easy availability of car loans.
Banks and non-banking finance companies offer car loans on easy monthly installments, making it very easy to buy a car now. This does not spoil your budget and also provides convenience.
When you buy a car by taking a loan, it is mortgaged with the lending company. This gives them the right to confiscate your property in case they are unable to repay your loan. If you are not able to pay the monthly installment on time, then they can pick up the car and take it away.
Hypothecation letter is also a part of the car registration process. Once you repay the loan, you can remove the hypothecation of the lending company from the registration papers.
Car loan for New and Used Cars
Lending companies offer loans on both cars, new and used cars. However, the interest rates on these two are different. The interest rates for new cars can range between 9.25% to 13.75%, while for used cars the interest rates range between 12.50% to 17.50%.
Car Loan Amount
The loan amount depends on your age and income. How much loan you get for the car depends on the lending company. At this time, usually you get a car loan up to four to six times your annual income.
Up to 80-90 per cent of the cost of the car gets financed. Some banks, however, finance up to 100%. It can be ex showroom price or on road price.
It's the amount paid to a dealer for buying a car. When you bring the car for plying on the road after paying registration charges, insurance, road tax etc., then it is the on road price.
When you go to take a loan for a second hand car, then the expenses incurred in re-registration are not covered.
Obtaining financing for the purchase of new and used cars.
|Financing can be up to 85%-90% of the car's on-road value. Some banks offer financing of up to 100% of the car's on-road value under certain conditions.|
|The term of the loan can be ranges in between one year to seven years.|
|The loan amount can be up to three times of the applicant's annual income.|
|Some lenders offer instant auto financing facility.|
|If you choose to buy a vehicle from a bank-affiliated dealer or manufacturer, you can get additional discounts and offers.|
|The most common car loan repayment structure is monthly installments (EMI).|
The entire process of applying for a car loan is facilitated by banks for the benefit of the loan. These days, everything from applying to loan approval and disbursing online can be done by visiting banks in person. The entire application process works like this:
Filling in the Form – In the first step, the applicants are required to fill in the application form of their desired bank with all the vital details such as personal documents and other necessary documents.
Approval of loans – If the bank finds that all the documents are correct and finds that the borrower is able to repay the loan on time, it imposes a penalty on the loan amount within a short period of two days.
Document Verification - After submitting the loan application, all documents are sent to the banks. When the car is insured in the event of a loan, documents for this must be submitted.
Disbursing the loan amount – The loan amount is given to the applicant after a specified period. In another way, banks offer a certain percentage of the money invested by the buyer in the purchase of their vehicle.
There are certain eligibility requirements to be met for a car loan, and one should make sure that they understand it properly. Let's see what are the factors that will decide whether you are eligible to buy a car or not:
|Age||21 – 60 years||18 – 65 years|
|Annual income||₹ 2.5 Lakh||Min. turnover of ₹ 40 lakhs|
|Loan Tenure||Up to 7 Year||Up to 7 Year|
|Loan to Value Ratio||Up to 100%||Up to 100%|