Online
Most lenders provide the option to apply for a car loan online. You will need to visit the official website of the lender to apply for a loan. The process to apply for a car loan is simple and the documents can be submitted online. In case your credit score is good, lenders may provide pre-approved car loans. In such cases no documents need to be submitted as well.
Offline
You can visit the bank branch and apply for a car loan. The relevant documents need to be submitted. Once the verification process has been completed, the loan will be provided.
The car loan elegibility criteria can be different for different banks. The common criteria are as follows:
- Age of the individual must be between 18 years and 75 years.
- Minimum net monthly income of Rs. 20,000.
- At least one year of employment with the current employer.
- Must be salaried or self-employed, working for a government establishment or a private company.
To prove your eligibility, you''ll need to provide certain documents. Though this too is specific to different lenders, the common documents will be:
The Equated Monthly Installments (EMIs) that you will pay will depend on a few key factors.
- The loan amount.
- The interest rate that is applicable to the loan.
- The tenure of the loan.
- The processing fees.
The higher the loan amount, the higher your EMI will be. Similarly, the shorter the loan tenure the higher the EMI. To find the best compromise between an affordable EMI and duration you should check out our car loan Calculator
When it comes to car loans in India, in general, the following features and benefits are offered. Note that the following is a generalised look at the advantages offered by car loans. Individually, car loan lenders may have highly customized and specialized offerings for their customer base.
- It helps you purchase a car even if you don''t have all the money for it right now.
- Most car loans will finance the on-road price of the car.
- Some car loans will even finance 100% of the on-road price. This means no down payments.
- With some banks offering financing in the crores, you are not limited in your choice of cars
- Most car loan offerings in India are secured loans. This implies that the car serves as the security/collateral for the loan.
- Procuring a car loan is usually simple when compared to other loan products. Individuals with slightly unsavoury credit scores can also hope to procure one. However, this option differs from bank to bank.
- Car loans in India often offer fixed interest rate options. This means you are always assured of a fixed amount that needs to be repaid monthly.
- Many lenders will offer interest rates based on your credit score so a high score to get you a cheaper loan.
- Car loans are not meant for just new cars. A used car loan can help you buy a pre-owned car.
Types of Loans:
There are a large variety of loans, each with a specific objective, characteristics and eligibility criteria. A few examples are classified as follows:
Secured vs. Unsecured:
Secured loans: Require a collateral, thus you offer up an item such as a house or car to secure it. When that happens, should one default, the lender is able to take over the asset. These loans usually have much lower interest rates. For example: mortgages, auto loans and home equity loans.
Unsecured loans: such loans have no collateral and thus are exceptionally reliant on the borrower’s credit standing and salary. Chances are, these loans have high chances of getting approved since lots need them, however, they have high-interest rates. Such secured loans include personal loans, cards, and education loans.
By Purpose:
Debt relief loans: a loan that pools together a lot of debt’s monthly repayments into one single payment per month.
Home mortgage loans: Enable one to purchase a new house or refinance an existing house.
Auto loans: Loans made to procure new or used vehicles.
Student loans: Loans aimed at taking care of educational expenditure.
Business loan: Usually used for start-up capital, growing the business or to buy new assets.
Medical loan: This loan is usually directed towards paying for medical expenses.
Other types:
Payday Loans: These loans are a short-term solution, however they offer high-interest rates which is why most people use them in an emergency only. Title loans: They are loans where the car title can be placed on loan for a short time at high-interest rates.
Pawn Shop loans: same principal as title loans only that they use personal items instead for borrowing money.
Who Needs Loans: So who actually uses them? This a common practice made by many people for entitled purposes.
Individuals: General expenses: usually, expenses that are for homes, the car they own, university, or other illnesses that require medical attention.
Debt consolidation: This is a better way of managing multiple debts.
Emergencies: Unplanned costs such as that of a car repair or home improvement.
Investments: Creating a new company, buying a property.
Businesses:
Start-up capital: Starting a new company for the purpose of business.
Expansion: Extending the existing business activities.
Inventory or equipment: Acquire the necessary inputs.
Cash flow management: Meet temporary gaps.
For all those in a debt, borrowing money should not be taken lightly. Attempt to assess your requirements, your ability to pay and the interest rates before going for the loan. Try to explore the market for amounts offered by competing companies and how their terms differ for you.