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Features and advantages of taking Car Loan

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Know More On Car Loan

How many times do you end up turning your head around when a BMW or Mercedes or an Audi passes by? How many of you are left in awe when a sports car zooms past you? How many of you dream of owning your car? Well, you are not alone in the league. Almost every person desires to have along with a house, his own car. Innumerable times, we have heard and have seen gestures of cars being bought or presented as a gift. If Audi or BMW seems too far-fetched, we can start our journey with a budget car like Nano or an Alto (in case Nano doesn’t suit your personality or is a miniature to accommodate your entire family).

To buy a car, a person needs liquidity. This is not always possible especially for the ones who are at the inception of their career. However, they may have a reasonable salary which is where the car loan feature can be optimally utilized. Car loans are now easily available across several banks. The banks and financial institutions have also started tie-ups with the dealers to access loans easily without you going to the bank.

What are the features of taking a car loan?

Car loans are disbursed to buy a new car or a used car as well. It can be applied for by salaried or self-employed individuals, partnership firms, companies for business purposes, proprietorship firms etc. The general tenure of repayment offered by most companies is from 1 year to 7 years. The rate of interest varies from one bank/NBFC to other, however average rate of interest is around 10% p.a. (fixed or variable).

Car loan are covered under secured loans, meaning they are lent by affiliated institutes like banks; hence they need financial security or collateral against which car loans can be availed. Mostly, the car itself acts a security wherein important car documents and ownership remain with the financier until you repay the entire amount of car loan.

The basic documentation required to avail a car loan includes KYC documents, Income proof documents, employment letter, employment/business stability proof etc. A onetime processing fee needs to be paid while applying for loan. A guarantor may be required as an added security measure for the loan. The tenure of loan and EMI slot can be chosen as per your preference.

Advantages of taking a car loan

  • Loans from 1 lac to 1.5 crore are provided which allows buyer to choose from a range of cars.
  • Loan upto six times of your annual income
  • For business purposes, there is a provision for tax benefits on car loans.
  • Special benefits are available for priority banking and wealth banking customers.
  • Flexible repayment tenure of upto 7 years
  • Certain banks will give you car loan upto 85% of the on-road price
  • Many banks now process online Application of car loans faster than the usual method. Online application status can be monitored online.
  • Some banks offer 80% on the valuation of Used cars with tenure upto 5 years

To sum up, car loans are easily available and beneficial to a great extent. Weighing all the benefits of the facilities offered by lenders, if they fit into your scheme of things, it’s worth a shot.

Happy& Safe Driving!

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Rijal Kadakia has great passion in writing financial topics. Hailing from a Gujarati middle-class family, Rijal has realized the value of money and got insights into financial nuances He believes in the power of knowledge sharing. Apart from active blogger, he has worked for pharma magazines like "Credence". He graduated in Pharmaceutical sciences from University of Mumbai and has worked in the field of healthcare analytics before joining an MBA school.

2 COMMENTS

  1. We have just been deciding upon buying a car this diwali. Yes you are right, not every person can afford to pay the full payment upfront and car loans come very handy. I wasnt aware that you have to have some collateral to avail this loan or that the car acted as a security. Its a good to know information for me before i start looking for loans. Thank you.

  2. Car loans can be availed both by the banks and other financial agencies. At times even the car company launches schemes for easy payment with 0% interest. So what is the difference between them exactly which is more reliable? Purchasing a car after house is the most sought after dream of mostly all Indians.

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