What is a Car Loan?
Today, proudly owning a car is not luxurious, but more a necessity. Fortunately, individuals have made the possibility of buying their dream car by a car loan from a reputed financial institution.
All main private and public sector banks provide car loans at aggressive rates of interests. By these loans, you should buy your dream car – whether hatchback, sedan or luxurious and repay the loan over a time period.
Features and benefits
When you avail a car loan, you’ll be provided with a listing of features and benefits Whereas all banks have a unique set of features and benefits that makes their car loan unique, these are the frequent set of features and benefits you’ll be given when you avail a car loan.
- Instead of buying a car out of your financial savings, you possibly can avail a car loan to purchase a better car
- When you qualify for a car loan, you should buy the car instantly
- You may repay the loan over a time period
- The car serves because of the collateral for the loan. Which means when you fail to pay your EMI, then chances of your car getting repossessed by the financial institution is high. Therefore, it’s recommended not to default in your car loan repayment.
- You possibly can avail a car mortgage simpler than different loans, however, this additionally depends upon the financial institution issuing you the mortgage
- Car loans include a fixed rate of interest option i.e. you may pay a fixed amount throughout the whole duration of your loan repayment process
- The most loan amount can be 100 per cent of your car’s on-road value. The repayment period is normally between 5 and 10 years.
Opting for a car loan
Buying a car, particularly when you’re someone at the beginning of your career may be expensive. Secondly, when you do have the funds and purchase a car, it might result in you getting on the Income Tax Department’s radar. When you purchase a car with a car loan, you have the benefit of constructing in your credit score history by paying the amount on time. This will help you avail loans in future.
Do’s and Don’ts while applying for a car loan
– Compare the loans provided by all banks and NBFCs and select the one which fits your requirements the very best
– Examine the rates of interest and see in case you have a fixed and floating rate of interest choice
– Be good about the car you want to purchase. When you’re beginning your career, you might need to purchase a smaller car as buying a bigger car might result in it being tough for you to repay the loan
– Read the terms and conditions, and the hidden charges and fees
– Decide on the insurance coverage
– Never apply to multiple banks, as it will negatively affect your credit score rating
Car Loan EMI Calculator
A car loan EMI calculator will help you decide the EMI amount you may pay on your car. This way, you may handle your finances accordingly. These calculators are simple to entry and provide quick outcomes without the necessity to do any manual calculations, thus making the method of loan planning simpler for you.
Using a car loan EMI calculator is simple. First, find out of the value of the car and the model you wish to buy and figure out how much down payment you can make. Subtract that from the price of the car to get on the amount of loan you want. Speak to different banks and find out the very best rate of interest on a car loan. Then select a tenure that suits you. Enter all these information in a car loan calculator and it’ll show you the EMI that you have to pay. You may also check Fatafatmoney’s Car Loan EMI calculator right here.
Getting your loan approved faster
A number of organisations provide the choice to check your credit score report without any cost every year. Through a credit score report, you may verify your standing and eligibility in acquiring a credit card or a loan. In case you may have a poor report, the possibilities of your loan getting rejected are high, so it’s necessary to have the credit rating to avail a loan – whether it’s a home loan, car loan, or personal loan.
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Pay your payments on time
One thing you have to be sure that your loan is approved is a good credit score rating. You may obtain this by paying your credit card payments on time or your month-to-month EMIs on the stipulated date. In case you have a poor credit score rating, you possibly can improve it by paying your payments on time for a minimum of six months prior to the loan application. It will make sure that you get a loan easily.
Don’t borrow too much
By paying a bigger amount upfront as a down payment, you’ll be able to reduce the loan amount, which means that it’ll easy to pay it off quickly. Keep in mind, a small loan amount means smaller EMIs or a shorter payment schedule.
Select a loan plan that fits your budget
Make sure that you select a loan scheme that allows you to simply repay the EMI of the car loan on the earliest. When you’re already paying EMIs for a loan, be sure that you don’t feel broke on the end of the month by simply paying loans.
Read the terms and conditions carefully
Every loan has a specific set of terms and conditions. It is very important to read these conditions carefully, as it can provide help to select one loan over the other
Get car insurance coverage
While providing a loan, the principal concern of banks and NBFCs is not to incur any losses. Therefore, having full insurance coverage is a requirement for many organisations earlier than sanctioning a car loan because it helps recover the balance debt in case there may be an accident whereby the borrower is at fault.
FAQs
1. I’ve applied for a car loan. How much funding will I get?
This will depend on the financial institution issuing you the car loan. Some banks provide 100 per cent of the car’s on-road price, but different banks such as SBI only offer you 90 per cent of the on-road price. The minimal loan amount is normally Rs 1 lakh.
2. What happens if I prepay the whole loan amount earlier than the due date?
You might be allowed to pay the whole loan amount, however, most financial institution allows this only after a minimum tenure of six months of your loan tenure. You will also be required to pay a small prepayment penalty, which relies on the remaining loan amount.
3. Which car models are financed by car loans?
Nearly, all small, medium and large vehicles can be purchased with a car loan. However, do verify the fine print of the financial institution’s brochure to check if there are any exceptions.
4. What are the generally available car loan repayment tenures?
Repayment tenures normally vary from 12 months to 84 months (1-7 years).
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