If you are looking for a new or a second-hand car, there are lots of financing options available in the market. If you do not have enough savings to buy your dream car either new or used, you might consider taking a loan. Before taking a car loan, it is important to know about car loans and how it works. A Car loan is also the fastest medium of getting a loan; for a short term gap or an emergency that one wants to overcome. A Car Loan / Vehicle loan can be taken from a Bank / Non-Banking Financial Institution.
What is a Car Loan?
A car loan is a loan that is taken for the motive of buying a vehicle; either new or second-hand for personal / commercial. It is a Secured loan taken against the vehicle you propose to buy or an existing vehicle you own.
New car Loan
When you have identified which car to buy; you can either look up various options for finding the best bank and product suitable to your need and apply. You can also approach consultants like us; who can guide & manage the entire process for you. You can get up to 100% of the on-road price of the car.
Used Car Loan
A used car loan is like a personal loan with a lower Rate of Interest. You can avail up to 125% of the car’s cost valuated by the bank.
Factors of Car Loan Approval in India
Cibil Score
CIBIL scores play a key role when it comes to car loan approval in India. The Cibil score is a three-digit numeric summary of your credit history, rating and report, ranging from 300 to 900. The closer your loan is to 900; the better your credit rating is. The CIBIL score is given by the Bureau of Cibil which is usually based on old loan repayment.
Repayment Period
The Car loan repayment period in India usually comes between 1 to 7 years. It is comforting for the borrower to decide what payment term he or she would like to opt for. The return period is a crucial factor in deciding monthly EMIs. If the duration is longer, the EMIs are lower and if the duration is shorter, the EMIs will naturally be higher. However; it is better that buyers fix the short payment period as they would otherwise have to pay higher interest rates.
Age of the Vehicle
In case of used car loan, The age and condition of the vehicle is a very important factor that the lenders consider when offering a vehicle loan in India. By the model and condition of vehicle, lenders determine the actual value of the loan to be given against the vehicle.