Features and Benefits of Car Loan
When it comes to car loans in India, in general, the following features and benefits are offered. Note that, the following is a generalized look at the advantages offered by car loans. Individually, car loan lenders may have highly customized and specialized offerings for their customer base.
- It helps you purchase a car even if you don’t have all the money for it right now.
- Most car loans will finance the on-road price of the car.
- Some car loans will even finance 100% of the on-road price. This means no down payments.
- With some banks offering financing in the crores, you are not limited in your choice of cars
- Most car loan offerings in India are secured loans. This implies that the car serves as the security/collateral for the loan.
- Procuring a car loan is usually simple when compared to other loan products. Individuals with slightly unsavoury credit scores can also hope to procure one. However, this option differs from bank to bank.
- Car loans in India often offer fixed interest rate options. This means, you are always assured of a fixed amount that needs to be repaid monthly.
- Many lenders will offer interest rates based on your credit score so a high score to get you a cheaper loan.
- Car loans are not meant for just new cars. A used car loan can help you buy a pre-owned car.
Car Loan Approval – Steps to Get the Loan Approved Faster
When you want to receive funds to purchase the new or used car that you have been eyeing for a while, it is better that you opt for a pre-approved loan. To avail such a loan, you can follow a few steps to quickly receive the required funds.
- Check Your Credit Report You can check your credit report to verify your standing in terms of credit score. A score of 750 or more can get you a lower interest rate. However, the interest rate for a score of 650 to 750 will be slightly higher. If you have defaults in your report, or have a very low score, your application may be rejected.
- Pay Your Bills on Time In order to avail a loan to purchase your dream car, you must have a minimum monthly pre-tax income and a manageable debt-to-income ratio (DTI). While it is usually not possible to change one’s income, you can improve your DTI by clearing off all your pending credit card debts.
To create a better credit profile, you should always pay your bills on time. If that is not possible then you can make timely payment of your bills at least 6 months prior to the loan application. If you pay your bills on time, it assures the lender that you will also repay the Equated Monthly Installments (EMIs) on time. This, in turn, will help you secure a loan easily.
- Look for Car Loan Options There are multiple options available in the market through which you can get a loan to purchase your new or used car. You should check the car loan interest rates of different banks and car financing firms in order to find the one that fits your needs.
- Borrow as Less as Possible By paying a larger amount upfront as down payment, you can reduce the sum that you will have to borrow in order to match the price tag of the car you have chosen. If you borrow a lesser amount, you will be in a better position to repay your loan quickly since a smaller loan amount means smaller EMIs or a shorter loan tenure. Additionally, the amount that you will have to pay to your bank or car financing organisation as interest will also reduce.
- Be Sure to Choose a Plan That Fits Your Budget The repayment capability of an applicant greatly impacts the approval of a loan that he or she has applied for. As you decide to get a loan to purchase the car that you have always wanted, you should make sure that you choose a scheme that you can afford. If you are already paying EMIs for other loans that you have availed, you should ensure that you can also pay the EMI of the car loan that you choose.
- Pay Attention to the Terms of the Loan A car loan that has low monthly EMIs but consists of a longer tenure might not be viable for you. Before you finalise your financing scheme, you should always try to opt for a plan that carries the lowest interest rate and the shortest loan tenure as possible. Avoid being tricked into an expensive payment situation by ensuring that the loan