What is a Car Loan?
A car loan is a very useful financial tool provided by banks and other financial institutions that enable you to fulfill your dream of owning that shiny new car in a very short time. A car is something that features on the wish list of most people today as it gives you a sense of freedom and independence from the rush and grind of public transport and daily expenses and headaches of haggling and arguing with the auto drivers and taxi drivers today.
However, cars aren’t exactly cheap either and it is usually a proposition that makes most people wonder how to come up with such a huge amount all at once. This is where car loans come into the picture and assist you with the funds that you need to purchase the car of your dreams, with terms and conditions that are extremely flexible and customer friendly. So don’t worry and go for that car you have been secretly thinking about and drive it out of the showroom today.
Why would I need a Car Loan?
A car loan has a few key advantages that make it an attractive proposition for people who are looking to purchase a new car. The first and most obvious one is the cost of the car itself, which is a non trivial expense in itself. Most people in India would not be able to afford the expense of purchasing a car in one go from their savings until they reach a rather advanced stage in their lives. Also, there are other expenses like home loans and other liabilities that may push the purchase of your first car even further back.
Moreover, purchasing high value items like cars and such with cash or cheques may raise some flags in the Income tax Department. You can also improve your credit score by taking a loan and sticking to the payment schedule religiously. This is a great way to ensure that you are eligible for further loans for things like houses and for personal reasons. A good credit rating is invaluable as it allows you to apply for bigger loans and get better benefits from a large number of financial institutions when you avail their products and services.
What are the features of a Car Loan?
Although your bank, depending on your relationship with them, may offer you a more personalized loan and give you more favorable terms, especially if you are a long term customer or a high value one, most banks will give you a car loan more or less along the lines of the following features:
- Allows you to get the car and deal with the payment in a matter of days instead of months or years that it would take if you decided to purchase the car by saving for it.
- A car loan helps you to get a car that may otherwise simply be too expensive and out of your budget, as well as spread the burden of the cost of the car over a long duration and making it easier to handle the cost of repayment and budget it in accordingly.
- A car loan is usually handled by the bank as a secured loan and as such the bank will consider your car as collateral until the loan is paid off. What this means for you as a customer is that even in the worst case scenario, if you end up defaulting on the payments they will simply take the car away but you don’t lose anything else.
- Car loans are usually easier to get than most other types of loans in most cases, making the dream of every family to own one more realizable for them.
- These loans usually come with a fixed interest rate making the repayment easier to budget for in fixed sized chunks that do not change over the course of the loan tenure.
- The amount the bank lends you for the car depends on the bank and the terms you have set with them. However, the generally accepted practice is for the loan to cover the entire ex showroom price of the car.
- The repayment duration can last from anywhere between five to ten years and the rate of interest for the loan depends on the duration.
What do I need to be eligible for a Car Loan?
Eligibility for a car loan is rather straight forward as compared to the eligibility requirements for a number of other financial products, depending on the bank. However, at a minimum, the following criteria must be met by any applicant.
- You must be a resident of India.
- You must be over the age of twenty one at the time of applying and must be under the age of sixty before the loan tenure is completed.
- You must be working in the same job for at least two years at the time of application and the job must have a stable income.
- Your annual income must be able to sufficiently demonstrate your capability to ensure the repayment of your loan.
What documents are necessary to apply for a Car Loan?
Depending on the financial institution that you go to, the list of documents that you are required to submit may differ. Most however, will ask you to at least provide the following documents when you apply for a car loan so keep these handy while applying.
- Proof of Income which can include things like your salary certificate, salary slips from the last three months, bank statements for the last six months and your returns from income tax.
- If you are a business owner, banks will ask you for proof of ownership, income tax returns for past three years, balance sheet and other additional documents for verification of ability to pay the EMIs.
- Proof of Identity, which can include any type of government issued identity proof like a passport, driving license and others.
- Proof of residence to show you have been residing at the same place for at least a year at the time of application.
Why should I choose BankingOnTips for my Car Loan needs?
We at BankingOnTips are committed to helping you find the perfect car loan suiting your requirements best from a wide range of possible options based on various factors like type of interest, different interest rates, type of loan and many more.
We try and show you the loans that you may be eligible for and help you to compare and contrast among them to find the one that suits you best and once you decide to apply for one, we will direct you to the concerned bank’s website for application request and further formalities.
- We provide you with all the details regarding the loan you are considering through on our portal and are committed to keeping the most up to date information on our website, so what you see is what you get.
- Comparison of different loans and their subsequent terms and conditions is a huge hassle and used to require going through the websites of different banks and reading over pages of terms and conditions to find the best one for you.
- We try to simplify this process as much as possible by giving you an easy way to compare the options across multiple different providers and letting you find the best one as per your needs. So try us out and drive home in your new car before the weekends.