Choosing a lender is the foremost important thing to be kept in mind while deciding for a loan. Cheap Interest Rates should never be the only criteria considered. There are various factors to be well thought of like the tenure of the loan, its repayment amount etc.

Which is a better option between a fixed rate loans and a floating rate loans?

We recommend floating rate loans over fixed rate ones. The core reason behind this is that we expect rates to trend down over coming months. Secondly, floating rate loans come with nil prepayment charges which are not possible with fixed rate loans.

Fixed rate loans may be advisable in a situation where you feel that your monthly cash flows (after paying off EMIs and other expenses) cannot take any additional burden/ unpredictable increases on account of interest rate rise. Fixed Rate loans, however come with a higher rate of interest than floating rate loans and typically carry a pre-payment penalty charge.

“How fixed is the so-called fixed rate?” is a different catch

A fixed rate is seldom fully fixed. Many of the banks offer fixed rate for the initial period and later convert them into floating ones. Though the total loan tenure might be of 30 years, fixed rate period may vary from 1-10 years. Many customers have often complained that they see a sharp increase in interest rate when the loan converts from fixed rate to floating rate. Always check first the applicable rate after the fixed rate period ends.

Do I need to provide a guarantor while applying for a car loan?

No, there is no such compulsion of a personal guarantor when you apply for a car loan. It is required only at the instances where your credit profile does not match the lender’s requirements by any case. Applying with a co-applicant again relieves you with the formality of providing a guarantor.
If at all you need a guarantor, then it could be your father, mother, son, daughter, husband, brother, sister, son’s wife etc. However, to consider them as guarantors for the loan, they should abide by all the norms like age, profile, etc. of the lending bank or NBFC.

What is the maximum amount of money that I can avail from a car loan?

The maximum loan amount that gets approved varies from one bank to another. In general, banks approve loan amounts ranging from 80-90% of the on-road price of the selected car. There are few banks who lend 100% of the car’s ex-showroom price as well. The percentage of the finance to be approved depends upon the type (standard/premium) and price of the car and also whether the loan is for a new car or a pre-owned/used car.

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