With companies already ready to finance 100% of the ‘on-road cost' of the cars, car loans have become extremely attractive even for the middle-class people in India. There are two types of car loans in India :
1. Secured Car Loans:
In secured car loans, you will have to put collateral or security with the financial organization.
2. Unsecured Car Loans:
In unsecured car loans, you must not place any collateral or security. Though the interest rates would vary, and not everyone can acquire an unsecured car loan.
Presently, banks offer easy finance schemes known as car loans where you can drive away with a car. However, choosing the right car finance or car loan seems very difficult. You may be confused that which car loan will provide you great benefits and might come to a decision about a car loan that has various "hidden" strings attached to it. These hidden strings may include hidden terms or conditions and hidden charges.
Before selecting a car loan, you should decide the type of car and check if it suits your expected budget. Then, you need to make a thorough research and study the current car loan market. Evaluate banks that are offering car loans and understand their interest rates and other terms and conditions.
Methods To Calculate Interest Rates
You can calculate interest rates in two different ways. The First one is through Flat Rate, and another is through Reducing Balance Method.
In the first method i.e., Flat Rate of interest, the principal sum on which interest computations are made remains similar during the entire term of the car loan. The overall interest is divided over the number of installments, to get the EMI.
Whereas Reducing Balance implies, deducting the paid-up principal amount from the stupendous car loan amount. Note that in Reducing Balance, interest calculations are made upon principal amount. The interest you give is computed on exceptional principal balance.
In the present market scenario, you can also get a car loan for “used cars". This shows the competitiveness of the car loan market. Therefore, be it a brand new car or a used car, best car loans are readily accessible from banks. The only requirement for getting a car loan is that the individual or borrower willing to take loan must fulfill the criteria for the car loan.
You can visit banks or financial institutions or browse their respective websites in order to get relevant information on car loans. Moreover, other websites related to finance can help you with significant information on car loans.