A car loan is definitely a good option if you have other financial commitments and cannot afford to pay a lump of money for one particular spend in one month.
A car loan, also known as an auto loan, is a loan given by a bank or an NBFC (Non-Banking Financial Company) to an individual to help him/her buy the car of their dreams. Cars are very expensive and it is not easy for everyone to buy them in one shot. So, the loan helps the individual to buy the car and then he/she can repay the loan in monthly instalments which are easier on the pocket than a large sum of money disappearing in one shot.
Features of a car loan:
1. They usually provide very high loan amounts of up to 2 crores in some cases for luxury cars. Loans begin at around 1 lakh in some banks.
2. Tenures range from 1 year to 7 years or longer in some cases
3. Interest rates range from 8.40% and move upwards based on one’s credit profile, loan amount and other factors
4. Up to 100% of the finance is covered by the loan in most cases
5. Registration and insurance are also covered by some lenders
6. The loans are disbursed quickly and even quicker in the case of pre-approved loans that are given if you are an existing customer with the bank you are borrowing from
7. EMIs can be decided by the customer in most cases and are very pocket friendly
8. Minimal documentation is required for an auto loan.
Eligibility:
1. Must be a minimum of 21 years of age
2. Must be a salaried employee or self-employed individual
3. Must have a good credit score and good credit history
4. Must have a regular monthly income
5. Must have a good relationship with the bank
This can change based on the bank/lender you are borrowing from. Do check your eligibility with the bank before applying. Also, do ensure that you check your credit score and have a good credit score for your loan to be approved easily and with a lower interest rate.
Documents needed:
1. ID proof (Aadhaar card, passport, driver’s licence)
2. Address proof
3. Bank statements for over 6 months
4. Income proof either by pay slips or form 16
This would also change based on your bank/lender that you are borrowing from. Check what documents are needed before applying for the same.
To apply for a car loan, click here.