With the purchasing power of people in India increasing rapidly, buying a car has become almost a priority for them. This leads them towards car loans, which facilitate in purchasing the automobile of their dreams. It would be prudent to take all aspects of these types of loans into consideration before you finally apply for the auto loan.
When you decide for the loan amount, note that Indian banks provide 2-3 times the annual salary of the applicant or 6 times the annual income of a self-employed applicant for purchasing a car. To buy a brand new car, you can get around 90 to 100 percent loan amount of the ex-showroom cost of the car. But for a used or second-hand car, you can get 80 to 90 percent loan amount of the car price. If your income is not sufficient, your relative's or spouse's income can be incorporated in evaluating your repayment potential.
As security or collateral, banks will acquire the car against the car-loan. It means that even though you possess and drive the car, the collateral is used by the concerned lenders for the security purpose. However, it implies that some essential credentials of the car will be returned to you only after you have entirely paid off your loan amount.
Interest rates depend on your track record, to pay off your past loans. However, besides the record, you can guarantee a less interest rate on the loan if you have paid a substantial amount of down payment to the lender. You can make the refund or repayment of the loan in 5 to 7 years of time-period.
The various credentials necessary for taking car loans in India comprise:
· Identity proof
· Residence Proof
· Income proof
The salaried individuals must submit their latest salary slip, Form 16 plus bank-statements of last six months. In case, if you are a self-employed individual then your bank-statements of last two years will serve the purpose of your income proof.
During the search for an appropriate loan, you must also notice that the concerned bank or the company is not charging down payment penalties. That means, you should always choose the bank or company for taking a loan if the same is charging a minimum amount. If you opt for low or no down payment penalties, you will get the benefit of getting relief from the loan before time. Alternatively, you can transfer the existing car loan to another loan provider or lender in order to get the advantage of low-interest rates.
Also, you must be ready to pay the processing fee on the car loans. The charges differ from bank to bank and should be paid up front. The moneylender will provide you with the amount of loan excluding the fee charges. Therefore, the charges will lessen the actual sum of the amount that you get in your hands.
Hence, it is important for borrowers to search for the best car loans in India. To find a suitable deal, you should study rates of different banks and additional terms & conditions. This is best done by keeping your requirements and conditions in your mind.