All You Need To Know About Car Loan In India
IT professional, recently joined a new organization, and with his elevated package he wants his independent car after getting this new job. Buying a new car is a cheerful event for him, but the matter of arranging the finance for the same is worrisome. Many Banks are offering a wide range of car loans, but Rahul is unaware about the knowledge, facts, factors, process associated with the car loan.
Hence, it becomes imperative to make Rahul understand few factors related to his car loan.
Loan Amount:
How much amount of the Rahuls’ car value can be financed by the bank is also essential to be known. This amount may differ from bank to bank. Since Rahul is intending to buy a new car, he can get 90–100 percent of the car’s ex-showroom price as a loan. But for a used car, about 80–90 percent of the car price can be financed. Loan amount also depends on the type of car and in which car segment the car falls into ranging from compact mid sized car to SUV’s or luxury cars.
Interest Rates:
One of the vital factors related to a car loans is the interest rate. This factor is crucial as it determines how much EMI Rahul will end up paying. The interest rates applicable to car loans in India will differ from bank to bank. In our country, the car loan interest rates range between 10% to 15%. Car loan rates are commonly fixed in nature and are not affected by changing market rates.
Tenure:
There is a particular period for which Rahul can avail the loan. This period is termed as the term or the tenure of the loan.
EMI:
Rahul’s EMI will be dependent on the variables like loan amount, tenure, interest rate, processing fee, etc. There are online EMI calculators which will guide him in reaching the correct EMI figure related to his car loan.The EMI can also be calculated in excel as PMT where the formula is
EMI = PMT(rate, nper, pv, (fv), (type)
Where,
RATE=interest rate, NPER=no of installments, PV = present value, FV= future value and type is 1 if EMI is paid at the beginning and 0 if it is paid at the end.
Eligibility Criteria
Eligibility criteria for car loans would be specified as per the profession. Since Rahul is salaried, then the:
1. Minimum age to attain the loan is 21 and maximum range from 65 to 70 years at the end of the loan
2. Annual salary on an average must be ranging between 1.8 Lacs to 2.5 Lacs
In case you are self employed additional requirements are:
1. Stable in business for at least 2 years,
2. Earning between Rs.2 lacs to 4 lacs per annum for buying a standard car or mid-sized cars.
Documentation:
The basic documents required at Rahul’s end, which needs to be furnished to the banks are:
1. Identity proof like PAN Card or Form 60 in absence of PAN, Passport, Driving License, Aadhar Card, Voter’s Identity Card, etc.
2. Address Proof: Some of the above documents may be considered as address proof as well where the address is mentioned along with a photograph. Electricity Bill, Telephone Bill, bank statement, etc. can work as stand-alone address proof as well.
3. Income Proof like Salary Slip for salaried people or last 3 year’s ITR or Balance sheet for self employed people.
CIBIL Score
Rahul needs to assess his CIBIL score, which will determine his credibility in repayment of a loan. Individuals with higher CIBIL credentials get a better chance of the loan being approved where as with lower CIBIL scores; there are chances that the lender may reject the loan application altogether.
Process
These days applying for a car loan has become simpler by applying online. Also, various car loan comparison portals will enable to compare among the leading banks offering car loans and may help people like Rahul to decide the right lender who is the best fit.
Source: https://www.behance.net/gallery/36303541/All-you-need-to-know-about-Car-Loan-in-India