Everyone has a dream of owning a house and a vehicle of their own. Earlier it was difficult to realize this dream, but now with many car loan offers from banks and other financial institutions, has finally made these dreams a reality. Now it is too easy to buy a vehicle without zeroing your bank balance and living off cat food.
The interest rate differs from bank to bank but is usually around 12.50 to 17.50% for second-hand cars and 9.25 to 13.75% for new vehicles. The repayment period can stretch from 1-7 years. There are few banks who offer 100% financing on selective car models! That is not the end of it. It involves other charges as well which you will have to keep in mind like there will be a processing charge which is around 0.4-1%. There can be foreclosure charges which are about 5-6% of the loan amount. Some banks allow part payment where if you wish you can pay partly payment of the loan, but it will again involve some extra charges.
The Loan Amount:
The amount depends on your job type, your income, your residence, and your credit score. It can be 4-6 times of your annual income or 25-48 times of your monthly income. Your credit score also plays a significant role in the approval of a car loan. Banks usually look for a minimum of 750 credit score, if yours is 750, then you should try and get the score higher than that, and if it is less than that, then well there’s no hope. Remember the higher the credit score, the better.
Some Helpful Tips:
- If you have set your mind on getting a vehicle, you should go through every loan offer that you can find on the internet before you choose one. Different car loans offer various benefits and different interest rates. You should opt for the one having the most benefits with the least interest rate.
- For women, banks offer special car loan offers. They offer discounts and low-interest rates. It is a good time to be a woman!
- Read all the terms and conditions carefully before you send in your application asking for a car loan. This will help you to avoid any extra cost that is not mentioned in the papers.
- Resist the temptation of going over your budget.
- Make use of online EMI calculator to calculate your EMI Payments for different vehicle advance.
- If you are impatient and want to avoid the paperwork, the approval, and processing time of your application, then there some banks who offer “Instant Car Finance Approval“ These loans usually do not need a guarantor and also have a part payment option.
The banks offer flexible payment options with low-interest rates and long tenure. The loans are less burdensome than home loans as they are collateral free. These loans are issues against your car.