New / Used Car Loan

10 May    Uncategorized
May 10

New / Used Car Loan

New / Used Car Loan

About New Car Loan

A new car loan is a great way to drive your dream car without making the complete payment upfront. You don’t need to wait for some more months or years to buy your dream car as you can take a car loan to meet your fund requirement.

Thinking of buying a new car but running short of funds? Worry no more, as there is a wide range of car financing options available to you right here! With interest rates as low as 8.60% p.a. and repayment tenure of up to 8 years, you can find the most suitable vehicle loan for your needs.

By Sandeep Kumar

Car Loan

Car Loans are the simple means to a glorious life milestone- owning your dream car. Almost all of us want to own that shiny set of wheels and drive it triumphantly, into the sunset. However, owning a car (vehicle in general) in India is a costly proposition, one that usually demands the impetus of a sizable financial assistance from banks/ financial institutions that have dedicated loan products in this regard. Almost all private/public sector lenders in India offer car loan options with terms and conditions that are highly customer friendly, affordable and scalable. By qualifying against a very simple list of identity, income and credit history qualifications, you can be the proud owner of your own brand new car. Listed below are some of the best car loan products you can opt for in 2019:

Car Loan – Checklist to Follow While Applying for it

StepsRequirementInference.
Submit Income ProofBank Statement (last 6 months)
Pay-Slips (last 3 months)
IT- Returns (last 2 years)
Lender wants to establish your ability to repay the borrowed amount.
Submit Proof of Address and IdentityPAN Card, Voter’s ID, Aadhaar Card, Passport, etc.Lender wants to establish your nationality, identity and permanent address.
Credit HistoryPAN CardLender wants to check your past credit records and establish if you can be trusted to make regular repayments.
Information About VehicleSales Receipts from the Showroom from wherein the Vehicle was Purchased.Lender must confirm that the deal was affected as intended.
Proof of Insurance and Driving LicenseCopies of the Vehicle’s Motor Insurance and your Driving License.Lender must establish that all laws and protocols are followed with regards to the purchased vehicle.

About New Car Loan

A new car loan is a great way to drive your dream car without making the complete payment upfront. You don’t need to wait for some more months or years to buy your dream car as you can take a car loan to meet your fund requirement.

Features and Benefits of Car Loan

How to Apply for Car Loan?

When it comes to car loans in India, in general, the following features and benefits are offered. Note that, the following is a generalized look at the advantages offered by car loans. Individually, car loan lenders may have highly customized and specialized offerings for their customer base.

  • A car loan helps you purchase a better car than the one that you can buy with your savings.
  • It allows you to procure a vehicle quickly- without spending too much time arranging for the money through the time-tested concept of ‘saving for it’.
  • It helps you manage the cost of purchase of the new car by spreading it across a longer duration of time. Thereby, this keeps you in control of your spending and makes the car much easier to pay for.
  • Most car loan offerings in India are secured loans. This implies that the car serves as the security/collateral for the loan. If you default on the repayments, you stand to lose the car, plus your credit score is damaged. However, you do have a measure of control over the proceedings – just be careful of not defaulting on your car loan EMIs.
  • Procuring a car loan is usually simple when compared to other loan products. Individuals with slightly unsavory credit scores can also hope to procure one. However, this option differs from bank to bank.
  • Car loans in India often utilize the fixed interest rate option when it comes to repayment via EMIs. This means, you are always assured of a fixed amount that needs to be repaid on a monthly basis.
  • The actual maximum loan amount depends on the vehicle to be purchased and varies from bank to bank. However, this is mostly 100% of the vehicle’s on-road price. The repayment tenure usually stretches from 5-10 years and offers different interest scales for different tenure slabs.
  • Most importantly, a car loan helps you buy your dream car. Aside from being a purely transport option, the car serves as a confidence booster and your means to assert the hard-earned financial freedom.

Car Loan – Why Should You Opt for it?

Choosing a car loan in India has two distinct reasons and advantages. Firstly, cars are expensive. This is a costly investment that is usually not completely affordable in the case of a typical middle class Indian. While his/her savings may account for a sizable portion of the purchase amount of the vehicle, a significant portion of the aforementioned purchase must be covered by the amount as provided by the car loan. Secondly, massive purchases (such as buying a car) with liquid cash could get you on the IT department’s radar, plus, you lose the chance to build up crucial credit history by subscribing to a car loan and religiously adhering to the repayment cycle. The credit history thus built, will help you procure more loans in the future. Hence, car loan in India are the surest and safest way to purchase your ideal vehicle.

Choosing the Right Car Loan

When it comes to selecting the car loan that works best for you, some fundamentals will come in handy. The following table explains the do’s and don’ts when choosing the right car loan:

Do’sDont’s
Compare – Check out the maximum number of options available to you. Not all car loans are created equally – and finding the best loan could involve some work. LoanMrt.com can help you here by helping you check out and compare between the various car loan and used car loan options available to you.Eligibility – Do not apply for a loan amount that exceeds your eligibility, as this will result in the rejection of your loan application.
What’s the Interest? – The applicable interest rate is potentially the biggest factor when it comes to choosing the right car loan. Not surprisingly, the lower the interest rate, the better.Multiple Applications – Do not apply with multiple banks as this will have a negative impact on your credit score.
Keep it Simple – Pay heed to your financial limitations and choose a car model that perfectly suits your budget. This will imply that your car loan is in line with your set requirements. Don’t fall prey to up-selling tricks at the car showroom.Relying on the Dealership – The loan that the dealer offers may not have the best interest rate. So, check the other options.
Hidden Fees and Charges – Sometimes what appears as obvious will have a hidden component. Be completely aware of the hidden fees and charges concerning the car loan, as also be cautious of time bound incentives and packages- they will expire soon and you may be left with a lesser deal than you hoped for. 
Insurance – Decide on the amount of insurance required. Choose the coverage and cost carefully after evaluating all options. 

Car Loan Application Process on LoanMrt.com

Getting a car loan is easy through the LoanMrt.com website. You can secure the most appropriate car financing product within a matter of few minutes. The steps involved in the car loan application process are as follows:

  • Visit the home page of the LoanMrt.com website and select the Car Loan product from the drop down menu. The page that shows up will have a list of car loan offerings from various banks.
  • You can compare the loans and select one that suits your needs. You should check certain parameters such as the amount of loan available, eligibility, interest rate, etc.
  • Once you have decided on the loan, click on the “Apply Now” button to initiate the application process.
  • Once the application is submitted, you will receive an e-approval form instantly. Your application will also be sent to the bank that you have chosen to take the loan from.
  • You will soon receive a call from the bank. You can track your application through email notifications or SMS.
  • The bank will validate your eligibility and submitted forms and disburse the loan accordingly.

Why Should You Apply for a Car Loan from LoanMrt.com?

LoanMrt.com is an online aggregator of car loan products as offered by banks and other financial institutions across India. Perceptively, checking out and applying for a car loan on this customer friendly website offers the following unbeatable advantages-

  • Comprehensive List of Car Loans

    Browse through and get all the information about the most popular car loans available in India. Having so many options before you allows for informed decision making, based on the analysis of the various features, pros and cons offered by the car loans.

  • Compare and Select

    Breeze through all the car loan options before you and select the one that best satisfies your requirements and respects your limitations. Traditionally, this step would entail a lot of running around and enquiries, however, LoanMrt.com turns this into an intensely informative, interactive and private affair that could be completed from the comforts of your home or office.

  • Check your Eligibility

    A simple and interactive wizard helps to ascertain your qualification for the car loan and throws up the best options in line with your requirements. This saves time and cuts out the middlemen.

  • Easy Application Process

    Applying for a car loan on LoanMrt.com is as simple as simple can be. After selecting your car loan and furnishing some essential details on the website, the process is taken over by the bank offering the car loan. Save on all the leg-work and get your car loan with just a few clicks on the computer mouse.

  • Robust Customer Support

    Have a query or concern with regards to the car loan in question? The expert customer support team from LoanMrt.com is always at hand to sort out all your issues. Procuring that ideal car loan was never more simpler.

  • 100% Free

    Making use of the various offerings from LoanMrt.com, including friendly tools like Car Loan EMI Calculator is completely free of charge. Convenience meets simplicity, at 0% monetary investment.

How to Calculate Car Loan EMI?

Banks and Non-Banking Financial Companies (NBFCs) offer new and used car loans at attractive interest rates for most makes and models of cars in the market. Car loans are repaid in Equated Monthly Installments (EMIs). Car loan EMI calculation can help you find out how much your car loan will cost you monthly. You can use the free online EMI calculator available on the bank website or a reliable third-party website to calculate the monthly cost of your car loan. The online tool can be used any number of times free of cost. It is advisable to use an online Car Loan EMI Calculator rather than calculating the EMI payments manually because of the probability of a human error.

It is not only simple and easy to use but also gives instant and accurate results. The steps involved are as follows:

  1. Enter the car loan amount, loan tenure, interest rate, and processing fee into the tool.
  2. Click on the ‘Calculate’ button and you will get instant results in the form of an amortisation table which represents your car loan repayment schedule.
  3. The table will consist of monthly EMI payments, overall interest payment, the outstanding balance after each EMI payment, etc. With the help of a bar graph and pictogram, you can easily interpret your car loan repayment schedule.
  4. Depending on the results, you can choose your car loan tenure and decide whether you want to opt for prepayment or pre-closure of your car loan. A short loan tenure means a higher EMI payment but you can pay off your car loan early. A long loan tenure means a smaller EMI payment but your overall interest payment will be higher. Therefore, use the car loan EMI calculator to choose the right loan tenure.

Maintain a low debt-to-income ratio wherein your EMI payments should not exceed more than 50% of your salary. If you have a high debt-to-income ratio then there are higher chances of defaulting on your car loan. Hence, it is important to choose an affordable car loan amount with the help of the car loan EMI calculator.

Car Loan Approval – What You can Do to Ensure the Process is Smooth

Whether you are planning to get a loan for a new or used car, there are many options available in the market to choose from. While you browse through all the banks and Non-Banking Financial Companies (NBFCs) to select the car loan that best suits your needs, you may want to opt for a plan that is pre-approved. Doing this will not only help you receive the funds that you require on time, but will also ensure that the process of your loan approval gets carried out as smoothly as possible.

Banks and NBFCs approve the loan application of an individual only after carefully evaluating his or her credit history, net income, and total expenses. When you are eligible for a pre-approved car loan, it means that the concerned bank or financial services company is ready to offer you the funds required to help you purchase your dream car after carefully verifying your credit profile and repayment capabilities. Opting for such a scheme will make your loan application and approval completely hassle free.

Car Loan Approval – Steps to Get the Loan Approved Faster

When you want to receive funds to purchase the new or used car that you have been eyeing for a while, it is better that you opt for a pre-approved loan. In order to avail such a loan, you can follow a few steps to quickly receive the required funds.

  • Check Your Credit Report
    There are a number of organisations that offer individuals the facility to check their credit report without any charges once every year. You can check your credit report to verify your standing in terms of credit and resolve the errors present such as late payment, collection, incorrect credit limit, etc. If a single error is left unresolved, it can negatively impact your credit score and cause hindrance in getting your car loan approved. By checking your credit report, you can get an idea of how your application will be treated by the lenders and will, therefore, help you take the necessary steps in advance.
  • Pay Your Bills on Time
    In order to avail a loan to purchase your dream car, you must have a minimum monthly pre-tax income and a manageable debt-to-income ratio (DTI). While it is usually not possible to change one’s income, you can improve your DTI by clearing off all your pending credit card debts.
    To create a better credit profile, you should always pay your bills on time. If that is not possible then you can make timely payment of your bills at least 6 months prior to the loan application. If you pay your bills on time, it assures the lender that you will also repay the Equated Monthly Installments (EMIs) on time. This, in turn, will help you secure a loan easily.
  • Look for Your Options
    There are multiple options available in the market through which you can get a loan to purchase your new or used car. You should check the car loan interest ratesof different banks and car financing firms in order to find the one that fits your needs.
  • Borrow as Less as Possible
    By paying a larger amount upfront as down payment, you can reduce the sum that you will have to borrow in order to match the price tag of the car you have chosen. If you borrow a lesser amount, you will be in a better position to repay your loan quickly since a smaller loan amount means smaller EMIs or a shorter loan tenure. Additionally, the amount that you will have to pay to your bank or car financing organisation as interest will also reduce.
  • Be Sure to Choose a Plan That Fits Your Budget
    The repayment capability of an applicant greatly impacts the approval of a loan that he or she has applied for. As you decide to get a loan to purchase the car that you have always wanted, you should make sure that you choose a scheme that you can afford. If you are already paying EMIs for other loans that you have availed, you should ensure that you can also pay the EMI of the car loan that you choose.
  • Pay Attention to the Terms of the Loan
    A car loan that has low monthly EMIs but consists of a longer tenure might not be viable for you. Before you finalise your financing scheme, you should always try to opt for a plan that carries the lowest interest rate and the shortest loan tenure as possible. Avoid being tricked into an expensive payment situation by ensuring that the loan terms are conclusive.
  • Get a Car Insurance With Complete Coverage
    While offering a loan, the main concern of banks and NBFCs is not to incur any losses. Therefore, having a full-cover insurance is a requirement for many organisations before sanctioning a car loan as it helps recover the balance debt in case there is an accident wherein the borrower is at fault. Additionally, you should also have a Guaranteed Auto Protection (GAP) insurance which recovers the difference amount between the insurance loss of your car and the outstanding loan.

How to Check Car Loan Eligibility?

In order to be eligible for a car loan in India, the applicant must qualify against a certain set of expectations. Generally, car loan eligibility is dependent upon the following factors-

  • The applicant must be an Indian citizen.
  • He/she must not be younger than 21 years and older than 60 years at loan maturity.
  • The applicant must have a secure employment, with regular income and tenure at the same job for atleast 2 years.
  • He/she must have a respectable annual income that properly demonstrates his/her capacity for loan repayment. If spouse is signing up as co-applicant, then his/her salary is also considered.
  • Must possess a landline/cellphone that marks his address, and occupation of that address for an expected duration of time.

Kindly note that all the numbers and variables here may differ from bank to bank. In their individual capacity, banks may have additional qualification procedures.

Real Life Case Scenarios

When a person lacks the financial backing, making big decisions in life becomes a problem. These decisions could range from anything like a marriage in the family, renovation of a house, to finance a child’s education, medical bills, purchase a new two-wheeler or a car. These big events in life require a certain amount of capital. This capital ensures that the individual’s needs are met. In such situations, a loan received from bank or any other financial institution can be a lifesaver.

Mr. Singh has had a lot of experience in dealing with loans. It wouldn’t be the first time he has applied for a loan and it wouldn’t be the first dire situation that a loan has come to his aid. It all started when Mr. Singh didn’t have the capital required to finance his daughter’s high school education. He was on the verge of selling his vehicle to pay his daughter’s fees, but thanks to a friend, he didn’t have to sell a single thing to get the money that was required. His friend spoke to him and made him understand the benefits offered with an education loan. As Mr. Singh had a good credit score with CIBIL, it was easy for Mr. Singh to procure an education loan from a leading bank in India in a matter of days.

Years later, Mr. Singh would use the services of a bank to apply and procure a two-wheeler loan to purchase a new two-wheeler for his daughter. Lucky for him, the education loan which he had taken earlier, was paid back to the bank without any delays. This, along with a good credit card history, improved his credit score which made it easy for Mr. Singh to procure a second loan to purchase a new two-wheeler.

Years went by and it was time for Mr. Singh’s daughter to get married. There are a lot of expenses that a marriage can demand and it is the dream of any parent to try and provide their children with the best marriage ceremony possible. But, Mr. Singh was financially strapped and he didn’t know how to come up with the capital that was required.

That’s when Mr. Singh decided to apply for a personal loan with the same bank that has helped him out generously in the past. The personal loan was offered to Mr. Singh at an affordable interest rate. Mr. Singh was so satisfied that he even procured a car loan to help him purchase a new car for his daughter and her soon-to-be husband.

At the end of it all, Mr. Singh was able to provide a comfortable life for his daughter and also repaid all his debts to the bank on time. A loan can be of great help in hard times and banks now offer different types of loans such as car loanstwo-wheeler loanspersonal loans, and education loans at affordable interest rates. Some banks even do not require a collateral to be provided when applying for a loan. Loans can be a valuable safety net for a person that provides financial security to an individual.

Check Latest Car Prices in India

With the automobile industry expanding at a rapid pace and with more and more car manufacturers establishing their bases in India, buying a car has become a hassle-free procedure. Car prices in India vary depending on the segment of the car purchased and also with the additional features provided by the manufacturer. BankBazaar offers a comprehensive list on car prices across various models of cars sold in India. Be it a hatchback, sedan, luxury sedan, SUV or MUV, we equip you with the necessary pricing information to help you decide on the right car suited for your needs and current financial situation.

Check Top Car Dealers in India

Car dealerships in India are committed to providing quality services across all areas of car servicing and maintenance. Majority of car showrooms in India have tie-ups with the automakers to impart training to their technicians in maintenance, diagnostics, system check, etc. Staff training and expanding the facilities is a continuous process taken up by dealers to ensure that customers receive the best value for the money they pay. Right from the sale of brand new cars and used cars to periodic maintenance and customer support, the dealership outlets offer a wide variety of services. Nowadays, most dealers list out their services online to ensure a seamless customer experience without requiring face-to-face interactions.

FAQs about Car Loans

How much funding can I expect in terms of the car loan?

This factor differs from bank to bank. While some banks offer the complete 100% of the vehicle’s on-road price, banks such as SBI offer upto 90% of the vehicle’s ‘on-road’ price. Generally however, the minimum loan amount will be equal to Rs.1 lakh.

Can I pre-pay the entire loan amount? What are the conditions involved?

Yes, you can prepay the entire car loan and save on vital interest payments in the future. However, most banks will allow the pre-payment option after you have chalked off 6 months on your loan tenure. Plus, you will be expected to pay a small fee as pre-payment penalty that will be dependent on the leftover loan amount.

What car models are financed by the standard car loan in India?

Unless otherwise specified, almost all small to medium sized cars, Sports Utility Vehicles (SUV) and Multi Utility Vehicles (MUV) come under the purview of car loans available in India. However, as mentioned, refer to the loan brochure for exceptions to this rule.

When applying for the car loan, do I need a guarantor/ security?

Almost all car loan products available in India are secured loans, with the procured vehicle itself acting as the customary security. Most lenders in India will not insist upon any guarantors, however, if your annual income does not match upto the expected requirement, then you may be expected to sign-up a co-applicant and/or guarantor.

What are the commonly available car loan repayment tenures?

Repayment tenures usually range from 12 months to 84 months (1-7 years).

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