How to Get high quality Car Loan
Author : Manan Sharma | Published On : 07 Jun 2021
Though buying a car on a bank loan does not disturb one’s budget, their equated monthly installments (EMI) should not exceed more than 15- 20 percent of their net monthly income. One must keep in mind that the Car Loan is a secured loan given against one’s car’s proprietorship. The car is the security for the mortgage. In the event one fails to repay this loan, the bank can take possession of the car and sell it to reclaim their money.
A bank furnishes a vehicle loan for anywhere between 1 and 7 years. counting on one’s repayment capacity, one can choose the tenancy accordingly. With a lower tenure, one pays less interest on the general loan amount. Since the tenure is low, the outstanding loan amount reduces rapidly thanks to the high EMI and, hence, one finishes up paying lesser interest. Also if one would like to re-sell the car early and upgrade to a much bigger car, a car with no mortgage amount is simpler to sell. This is often thanks to less paperwork and prepared transfer of possession of the car.
However, with an elevated tenure, one is not stretched for cash, and therefore the EMI that one simply pays is straightforward on your wallet. Also if there's the reduction of lending rates by the regulator, then the possibility of one getting the advantage of reduced interest outflow is higher for a better term. This is often because most loans are linked to a base lending tariff, which each bank decides to support the lending rate from the financial institution, Reserve Bank Of India (RBI).
A person who opts for the bank credit to fund their car purchase would need documents such as the PAN card (Permanent Account Number), passport, driving license as proof of their identity. Aadhar card would serve the purpose of proof of their identity, age, residence details. They would also need to provide a recent photo. As proof of income, one would have to provide recent bank statements, salary statements, and income tax return statements. An attachment of car documents would also be necessary.
Canara Bank Car Loan provides a detailed explanation about the eligibility criteria, the factors that affect the car loan eligibility, the documents required, loan fees and charges, and the repayment schedule. It serves as a one stop solution to gain full knowledge about all the requirements of a car loan.
5 suggestions on how to get the best car loan:
1. Find the right deal:
One must buy the car from a dealer who has a relationship with a bank that can offer one the best finance deals. Make sure that one understands all the costs and charges. Specifically one should check about processing fee, prepayment charges, and type of interest (fixed or floating, reducing balance or not).
2. Approach your existing banker:
Getting a loan from a bank where one already has a relationship can save one a lot of time, hassle, and money.
3. Check your car’s eligibility:
Most banks have an individual qualification basis when it comes to new or used cars. If one is buying a pre-owned car, make sure that one’s bank will finance it. In addition to the standard criteria, different banks will have additional criteria to evaluate the eligibility of a car for a loan depending on its age, model, and condition.
4. Ensure you have a good credit score:
Before one applies for a loan, make sure one has a credit score of 750+. If one is a credit-worthy customer, one will get higher loan amounts, faster, and at better rates.
5. Get the right amount:
Is the bank asking one for a huge security deposit on the car before giving one a loan? Is the loan being offered at the on-road price or ex-showroom price? These will make a huge difference to the number of Car Loan one can get.