Many lenders give attractive offers to compete with other lenders in the business market. One such proposal is the Teaser Rate Car Loan. The customer gets the opportunity to look for many options to select the reliable offer based on the requirements like amount, interest rate, tenure, and EMI.
The financiers are coming up with innovative approaches to attract customers, making each new offer more tempting and irresistible. The teaser rate car loan has been launched recently in the Indian stores.
What is Teaser Rate Car Loan?
Originally, Home Loan was sold at teaser rates, but now Car Loan is also added in this alternative.
- It is a loan where the Rate of Interest varies as repayment tenure proceeds (typically being 8% in the initial year and 10% in the second and third years)
- This loan variant’s benefit is that the EMI burden is less initially, giving way to adjust financial requirements after paying the down payment from his savings.
- In a teaser car loan rate of interest in the initial years in lesser than conventional car loan interest, it increases subsequently to make up the financiers’ losses.
Features of Teaser rate Car Loan
Many features differentiate a teaser rate loan from traditional car loans:
- The borrower makes the minimum down payment of 15% of the car’s on the road value before getting the loan.
- For the used car, the sum available is less as contrasted to a new car teaser loan.
- There is a limitation of two and a half times the annual income of the candidate. This limit may be improved in case the earning partner becomes the co-applicant in the car credit.
- In case the borrower decides to extend the loan tenure after initial years, there is an added penalty of about 2% of the sum repaid at a lower interest rate.
- The total Car Loan Interest Rate charged for the loan tenure is by the Base Rate announced by the RBI.
- The processing charge for the teaser rate car loan is lower than traditional loans.
Although the borrower’s initial interest burden is less in case of a teaser rate car loan, there exist specific other criteria that must be considered before opting for this loan. The overall value of the loan paid becomes much higher than the overall cost of the car. The teaser rate’s difference is an abrupt change in the EMI after the initial two years. Thus while a teaser rate car loan may resemble attractive prima facie, there are these associated cost features that the customer needs to identify an estimate before availing the facility.
DialaBank provides you with all the options to choose from while applying for a car loan.