Buying a car is considered a milestone achievement, forsociety sees it as a symbol of having accomplished something worthwhile for your family and yourself. It boosts your self-esteem, gives joy to your family and marks the beginning of enjoying many journeys together with your loved ones.
However, since buying a car is an expensive purchase, many of you also consider taking a car loan to supplement your savings, to go ahead with your purchase. But taking a car loan online as well as offline involves many steps and procedures, and therefore you may have many queries that make you hesitant about applying for the same.
So, to address your queries, we have made a list of common questions that are frequently asked by potential car loan takers:
Q1. How Much Amount Can You Get?
Banks and NBFCs usually provide for 80% – 90% of the car’s showroom price. You will have to pay the rest of the amount from your pocket, which will include the rest of the car price, registration for road tax and other such costs.
Q2. What is The Loan Period?
The tenure of car loan, as offered by most lenders, usually ranges between 1-5 years. However, in some cases, the insurer may extend the tenure to a maximum of 7 years.
You should pay off the loan at the earliest possible as cars depreciate with time and then you may have to pay more than its actual cost. Also, you can reduce your EMIs by opting fora longer tenure.
Q3. What is the Interest Rate?
Interest rate starts from 8.80% and varies for different banks. Moreover, it will also depend on factors like the loan amount, your salary, credit score and other relevant aspects.
Q4. What are the types of Interest Rate?
There are two types of interest rates- Fixed and Floating Rates. In case of fixed interest rate, you will have to pay the same EMI throughout the loan period, while in case of floating rate, your EMIs will vary depending on the changing interest rate, as per the economic conditions prevailing at different times.
Q5. What All Documents Will You Need to Show?
You will need to produce the following documents in front of the bank-
- Application Form
- Age Proof
- Residence Proof
- Income Proof
- Application Form
- Passport Size Pictures
- Bank Statement
- Signature Verification Proof
- Pro-Forma Invoice or Rate List of The Car
Q5. How Much Time Will the Processing of Car Loan Take?
The bank will approximately take at least one week to process your application. This processing will include conducting a thorough background verification followed by disbursal of the loan amount.
Q6. Can You Negotiate the Loan Terms?
Yes, you can negotiate the loan terms. Also, if you are taking the loan from a bank with which you have already done business or one with whom you already hold a salary or savings account, then you will be able toget better terms increases as the lender already knows about your financial status.
However, if you are approaching a new lender, then you need to go prepared with your salary slip, credit score, and other financial details to justify that you are financially stable.
Q.7 What is the EMI cycle?
Your EMI cycle or due date will depend on you. You can choose the day as per your convenience. However, some lending banksgive a set day because their processing days are automated.
- What are the chances that your loan application may get rejected?
The bank may reject your loan application of following reasons-
– Low credit score
– Any defaulton payments in the past
– Negative remarks like “written off” or “settled”
– Discrepancies in the salary slip
– A problem in your background verification
– There were errors in your application form
In all such cases, the lender will send you a rejection letter, stating the details related to the reason for rejection. If you wish to apply for the loan again, then you can rectify, and ask again.
- What can happen if you miss paying EMI?
Most banks usually stand a delay in payments 1 or 2 times, but if you don’t pay the EMI at all, then the bank has full authority to seize your car. Also, if you default on EMI, it will hurt your credit score for the future.
- Can you get a loan for buying a used car? Also, what are the factors that will affect the interest rate?
Yes, banks give loans for buying used cars, but at a higher interest rate.It is because the old car has less resale value.
The factors that will affect the interest rate include factors such as credit score, company where you work, your salary, where you stay (rented or owned house), debt to income ratio, tenure you choose and also the age and model of the car.
Take Car Loan to Bring Home Your Dream Vehicle
Once youfeel confident about the types of car loans and car loans India, approach leading banks and apply for a car loan. Reputable banks like Axis Bank offer you funding starting from Rs. 1 lac to 100% for up to 8 years, with zero down-payment.
So, choose which car you want to buy, get all your documents in place, and then approach the banks. We are sure that you will bring your dream car home with joy very soon!