Auto loans are loans offered to customers for the purpose of purchasing new vehicles and also refinancing old one. In India, auto loans fall into three different categories namely two wheeler loans, car loans and commercial vehicle loans.
Recent reports say that the sales rate of two wheelers and four wheelers have gone up. Banks offer loans for the purchase of commercial vehicles with lower interest rates. Among all auto loans, car loan are the fastest growing segment.
Records say that almost 75% of the vehicles purchased in the previous decade are through auto loans. Banks usually offer 90% of the cost of new vehicles and 85% of the cost of the value of the vehicle value in case it is a second hand vehicle. Interest rates of auto insurance are calculated on a monthly reducing balance where it depends on the tenure period and the other factors related to the kind of automotive model.
Auto loans are offered based on the repaying capacity of the borrower. The processing of these loan is easy and does not involve any processing fees for new vehicles. The borrower has to submit documents such as proof of income for the last two years, address proof, a copy of MOA and AOA certificates in case of public or private companies.