Car loan is a type of loan provided to consumers to buy their dream car. These are usually offered for between 5-7 years and are easy to get if one have a minimum income level to qualify. Very often the automobile dealer will have a tie-up with a lender to offer loans to his customer at a good rate. The interest rate of car loans depends on the Flat Rate and Reducing Balance method.
Features of Car Loans
Covers the widest range of cars and multi-utility vehicles in India
Flexible repayment options, ranging from 12 to 84 months
Repay with easy EMIs
Interest rates are comparatively low
Hassle free documentation
One should also not go for unsecured loans for the secure future.
One should not decide on the loan by only comparing the interest rates of the loans.
Flexible schemes & quick processing
Before getting the loan for the purchase of the car the borrower should know about the following things :
The borrower should know about the offer given by the banker
One should get the loan from the lender which is known to him.
One should know about what are the advantages and disadvantages of leasing.
For getting the loans one should not go only for the banks but he can also contact other financial institutions also.
Before getting the loan you must know critically about the rate of interest which you have to pay after getting the loan.
One should have a good credit history.
One should get the good and very right knowledge about the loan
Generally car loans don’t require a guarantor but if the customers income does not meet the credit criteria, then he will be required to have a guarantor for his loan. Guarantor can be his/her spouse, if employed, or a third party guarantee is also will do.
Banks charges processing fees on such loans, it is a one-time charge taken for processing and legal paperwork. At the beginning of the period, the bank requires you to pay 2-4 percent of the loan amount as processing fees. For example, if you take Rs.5 lakh at 15% for 5 years (60 EMIS) and charges you 2 percent as processing fees, you are in effect paying an amount of Rs.10,000.
Things to be Noted while Availing a Home Loan
Flat Rate of interest
Here the principal amount remains same for the entire tenure of the loan. The total interest is divided over the number of installments to derive the EMI.
means reducing the paid-up principal amount from the outstanding loan amount. The interest paid is calculated on outstanding principal balance.