Whether you are going for used car loan or a new car loan, it is beneficial to do a thorough research before you avail one. Making a thorough analysis and comparing your available options is one of the best means for ensuring less risk and more cost-savings. Once you apply for a car loan, the bank will contact you to take the process further and if you are eligible you can get your car loan approved quickly. However, it is necessary to understand a few basic points before you go ahead with a car loan scheme, so that you can find the right car loan provider. Here are some basic things that you must find out about the car loan schemes in India, before finalizing one that suits your needs:
How To Avail a Car Loan?
Check your available options. With the availability of third-party comparison websites online, you can analyse and compare the various car loan schemes and car loan providers available in the market. You should also be aware of the complete application and loan process from getting a loan to repayment schedule and closure of files.
You can apply for a car loan either through any of the branches of a bank offering a car loan scheme, directly through the dealership or you can also apply online for a car loan. With Mobile Banking, Net Banking and Phone Banking facilities, car loan application process has been simplified.
The down payment to be made plays a significant role in availing a car loan. Evaluate the loan margins set by a bank or financial institution and whether it meets your financial requirements and budget before availing a car loan. You can negotiate the down payment/ individual contribution to the cost of the car with the issuing bank or lending organization.
What is the eligibility criteria for availing a car loan in India? This is one of the first things you have to research upon before applying for a new or used car loan. There are parameters set that determine the car loan eligibility in India. There are various factors affecting car loan eligibility, such as: CIBIL Score, income, age, age of the vehicle in case of used car loan, etc.
Benefits for First-time buyers
First time buyers or those who intend to avail car loans for new vehicles have some special privileges over those who wish to purchase used cars. There are various schemes, discounts and offers provided by banks and NBFCs to attract more customers. An example of one such instance is the loan margin or down payment options offered on new car loans, which are very favourable to the applicant compared to that offered on used car loans.
It is very important to know and compare the applicable interest rate on the car loan. You have to have an estimate of your amortization schedule, EMI pay-out and overall cost of the car loan so that your financials are not adversely affected. You can check the various interest rates offered by Banks, through online comparison websites. Interest rates not just depend on the lender but also depend on an applicant’s creditworthiness.
The loan tenure is another important factor that must be taken into consideration while applying for a car loan with a specific bank. The duration for which you have to repay the loan affects your overall expense incurred in availing the car loan. In India, car loan tenure ranges from 24-36 months. The rate of interest applied on your car loan is directly proportional to the tenure you have chosen.
There are several modes of repayment of car loan in the form of EMI, which is available to a customer. You must enquire what are the available options provided by the Bank. Some of the common modes of payment include standing instructions, remittance from salary account, post-dated cheques, Electronic Clearing System (ECS) money transfer, etc.
Proper documentation is a crucial element in receiving your approved car loan amount. Even if you are eligible for a car loan, if you do not provide the complete list of documents as requested by the Bank, your loan application can be rejected or delayed.Some of the documents that are generally asked for by Banks include: Identity proof, residence proof, Income documents, etc.
Prepayment and Other Charges
Understand the terms and conditions thoroughly and watch out for any hidden charges. In order to make sure that you do not incur more expenses, you have to closely evaluate and compare the prepayment or foreclosure penalty levied, the processing fees, late payment charges, etc.