Finance

Applying for car loans? Here is what you need to know

In India everyone wants to build their own home first and then invest in a car. One can definitely make this purchase faster and easier with car finance options. A number of banks and non-financial institutions not only offer goof homes loans, but excellent car loans as well.

Car loans today, come with low interest rates, feasible tenures and affordable EMI payments. Thus, with a number a car finance options many are able to enjoy the comforts of their very own car while effectively balancing their monthly budget.

Here are a few facts that one should know when opting for car loans-

Availability of car loans

Car loans can be availed when buying a brand new car and even on a car that is pre-owned. In both cases the rate of interest varies. The rate of interest on a new car loan varies from 9.25% to 13.75%, while on a car that is pre-owned, one may get an interest rate ranging from 12.5% to 17.5%.

Eligibility criteria

An eligibility criteria exists for all kinds of loans, and car loans are no exception. One needs to fulfil some conditions in order to avail an auto loan. Some factors that influence eligibility are age of the borrower, monthly salary, and type of employment as well as resident address.

Here is a list of some of the documents that a borrower will have to produce at the time of loan application-

• Identity proof, for instance a copy of your PAN card, driving license or passport
• Proof of address
• Proof of age
• Photographs
• Documents of the car
• Proof of income which may include salary slips of minimum 3 months, or a recent income tax statement

Some banks or lenders even require a copy of the car insurance at the time of submitting the loan application.

Approval of loan amount and interest rate offered

The amount of loan that may be approved, and the interest rate offered on the loa.n generally depends on the age as well as income of an individual. Most lenders give around 80% to 90% of the loan amount that has been applied for. A few may also be ready to offer 100% of the amount that is applied for.

The rate if interest charged on car loans is mostly fixed. Some individuals also opt for a floating rate of interest with the hope that the interest rate may fall soon. In case of car loans, some lenders also offer discounts on the rate of interest to women. Thus, go through the details when considering various car finance options

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