Understanding the basics of car loans!

By | September 17, 2012

The unprecedented economic growth witnessed in India in the past one and half decades has resulted in substantial increase in earnings of a large segment of population. This new found affluence has had a tremendous impact of the production and sales of cars in the country. This boom in car sales has been further propelled by the easy availability of financing options for all kinds of cars in the country. Additionally most of the major car manufacturers have set up production facilities in the country and have come up with a variety of options to suit every kind of need of the customers.

Where to get a car loan from?


Availing a car loan had never been simpler in this country. There are different kinds of sources for funding the dreams of owning a four wheeler. All the leading banks whether in public sector or private are offering car loans. There are many non banking finance companies and dealers who too gave come up different kinds of car loans to woo more and more customers. One can easily avail up to 90% of the total cost of the car through such a loan. A minimal amount of down payment has to be made as the buyer’s contribution towards the purchase. The financing institution after approving the loan issues the cheque or draft in the name of the dealer selected by the customer who can straightaway go and pick his up his object of desire from the showroom after the pre delivery formalities.

Who can Apply for a Car Loan?


The eligibility criteria set by the financing institutions are pretty simple at this point of time have been greatly simplified in order to help more number of customers access the car loans. Anyone who is between the age brackets of 25 to 65 years can apply for a car loan as long as he has adequate proof of income for repayment of the loan. Normally the minimum annual income that the banks look for is Rs. 100000 annually before approving a car loan to an individual. However this figure can also vary at the discretion of the financing institution depending upon individual situations.

What are the types of car loans available?


The car loans have been customized to suit the requirements of every kind of customer. There are loans which come with a fixed interest rate wherein the rate remains same throughout the tenure of repayment of the loan. The other kind of loans has a variable rate of interest which fluctuates in between the repayment tenure. However the terms and conditions of such variations are pre determined and agreed upon by the customer and the lending institution at the time of approval of the loan. In certain cases the banks also offer an adjustable rate of interest where the rates may be lower for a certain portion of the tenure and then increases subsequently as per the mutually agreed terms and conditions.

With so many new offers and customized solutions available in the market taking a car loan is extremely easy and also a smart option while buying a car.

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