With the attempt to lure more and more consumers, lenders are introducing more and more financial products. Different kinds of customized car loan products are available in the market, that are specially meant to suit different needs of the borrower.
In addition to various products of Car Finance, there are various methods, that are available for the repayment of the loan. Most of the consumers are well aware about the methods available for the loan repayment.
Here are the different schemes that are available for making repayment of auto finance:
It is the most common type of repayment options, that are commonly availed by the people today. Under this option, a fixed rate of interest rate is decided to accord, the person has to pay calculated EMI’s (Equated monthly Installments) in the specified tenure. Under this option, the interest rates are the lowest and the EMI’s can be paid at the end of the month or the beginning of the month.
Step Up EMI’s: Under this option the amount of EMI’s increases during the loan term as the repayment progress from lowest in the first year, that steadily increases after that.
Step Down EMI: Unlike Step Up EMI option, the EMI reduces gradually that are highest in the first year. It reduces the burden for the next coming years.
Balloon EMI’s: Under this method, there is a provision of paying the lump sum amount about 20 % of the principal amount at the end of the repayment tenure period. The interest rate in this method is higher than the regular Emi’s method, as it reduces the initial burden on the borrower.
Special Tie Ups: It is referred to as super saver tie up method. This scheme ensures the maximum benefits to the customer, as the financier has the tie up with the bank that a borrower uses. Under this arrangement, there is always an additional amount of money present in the account; the same can be used for making repayment of the car loan.
Each consumer has a different set of financial considerations that are based on which the consumer can find the most suitable option for his car finance. A person must have a thorough knowledge of various opportunities available in the market.