Owning a car is no longer a luxury in this fast-paced world, rather a necessity, especially for families. Using your own money would be perfect for buying a car but not everybody can afford that. The reality is that most people need a car loan to pay for a new car.
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You cannot drain all your savings for this huge purchase. A car loan enables you to purchase your desired car early in life without disturbing your finances. An affordable monthly instalment option allows you to travel with convenience as well as avoid unnecessary debt.
At present, getting a car loan has become convenient and you can choose an EMI to repay the car loan amount. It becomes a win-win scenario, where you can act smart by purchasing the ideal car for yourself and avoid unwanted debt too. But when you are availing a car loan for the first time, it is crucial to know car financing basics before you take the plunge.
- The applicant should be an Indian citizen
- The age limit of the applicant should be between 18-75 years
- Minimum monthly income Rs. 10,000
- The applicant should either be salaried or self-employed
- 2-3 years of working experience
- Approved residence with parking space
- Residential stability of at least one year
Things to Consider When Choosing a Car Loan
- Check your credit score
Check credit score and evaluate your credit history before applying for a car loan as many lenders offer the loan based on your credit score. Make sure to get your credit report before applying for a car loan, which would help detect any fraudulent transactions, thereby decreasing your chances of loan rejection.
2. Pre-owned or a brand-new car
Decide on whether you want a brand-new car or a pre-owned car. Along with the cost factor, there is also a difference in the car loan terms offered for pre-owned vehicles in comparison to new cars. Some banks also have associations with authorized dealers of pre-owned cars which can get you additional benefits.
3. Compare lenders
The rate of interest varies across different car loan lenders. Compare the rate of interest offered by various financial institutions online before reaching a decision. Also, compare car loan options on other essential parameters such as processing fees, prepayment charges, LTV ratio and so on.
4. EMI affordability
The loan repayment term is one of the most crucial aspects of a car loan. Loan amount, tenure, and interest rates are essential factors that car loan lenders take into consideration while deciding your EMI amount. You can ascertain your EMI affordability by subtracting your fixed monthly expenses like insurance premiums, SIP contributions and existing EMIs from your net monthly income. You should opt for a smaller loan tenure to save the interest cost only if you can afford to repay your car loan EMI without negotiating on your monthly savings and expenses.
The car loan process is now easier than you think and can be applied online from the comfort of your couch. Reputable financial institutions such as Axis Bank offer car loans at affordable interest rates. You can also calculate your monthly instalments through a car loan EMI calculator available online for better financial management. You can avail car loans starting from Rs. 1 Lakh and with a maximum tenure of 8 years. Do not hesitate to enquire about crucial factors such as down payments, interest rates and loan term during the car loan application process. Buying your own car is probably one of the biggest investments you will make in your life, so make sure to make an informed decision.