Working in a well-known startup as Chief Marketing Manager, Rohan was planning to buy a premium luxury car. He was in love with Mercedes-Benz cars and has dreamt of buying Mercedes-Benz C-Class. Rohan was aware of the fact that he cannot afford this car if he will consider his salary only. He had to take a car loan to satisfy the high price tag of the car. Sitting in a café, he was in a deep thinking how he will take a car loan. What should he consider and what should not. This can be your situation also. If you are also planning to buy a luxury car, you can also be in a dilemma known as car loan dilemma. There are some points that you must keep in mind while taking a luxury car loan. Because it’s all about your money. You are going to spend Rs. 20 lakh or Rs. 50 lakh to buy a car, so you must choose wisely. Here is a checklist of 5 must read points before taking a luxury car loan:
Down Payment: Down payment is the amount that you will pay to the dealer while buying your car. For example, if your car price is Rs. 35 lakh and you are paying Rs. 10 lakh to the dealer and taking Rs. 25 lakh as a loan from the bank, then that Rs. 10 lakh is the down payment. Usually, banks like HDFC bank, Axis bank do 95% to 100% funding. But, you should always calculate your paying capacity. Try to pay higher down payment. Higher the down payment, lower will be the loan amount and the EMIs.
Interest Rates: Buying a luxury car will give you relaxation in interest rates. Higher the car price, better offers will you get. The interest rate for car loan varies from 9.35% to 10.75%. For high-end cars, you will get lower interest rates easily as you are going to take a higher loan amount from the banks.
Check Offers: Always took for offers while taking a car loan. Banks and NBFCs run a variety of offers to attract customers. It may be a contract with the dealership or an offer on some specific car models. So, always keep your eyes open. You may get attractive discounts on your car loan.
Loan Tenure: You can take a car loan for maximum 7 years. Banks check your eligibility before approving your loan amount. The tenure for a car loan is from 1 to 7 years. You should try to keep your tenure shorter. In longer loan tenure, you will be paying high interest and more EMIs. In a shorter tenure, your number of EMIs will be less and therefore, you will pay less interest. So, always choose short tenure for your loan.
Compare and then decide: Don’t make a decision without comparing online. Check online and compare offers across all leading banks. You can even check your eligibility and documents required by taking help of financial portals.
These are the 5 points that you must check. If you are done with all these points, then you can mark a full stop on your search and take a car loan for your luxury car.