Car Loan in India
With numerous options available to you, it is now simple applying for India car loan. Getting it approved is not a problem as well. But people, who are already in debt and have a bad credit history, need to be a bit careful while doing so. It’s important for loan providers to feel that you are not struggling in repayment of your financial obligations.
You can also get the India car loan on your existing vehicle to purchase another one. The finance options are always open for you. Incase you are struggling with your credit history do not worry. I have some tips for getting the loan approved even with a bad credit history.
When deciding on the loan amount, note that banks in India provide 2 to 3 times the annual salary of the applicant or 6 times the annual income of self-employed people for buying a car. To purchase a new car you can get 90-100 percent amount of its ex-showroom price. As for used car, the loan amount is kept 80-90 percent of the car price. Your relative’s or spouse’s income also can be included in the assessing your repayment capability, if your income is not sufficient.
The banks will take the car as security against the loan. This means that while you own and drive the vehicle, it is actually being used by the lenders for the purpose of security. In turn it implies that some crucial papers of the car will be returned to you only when you have completely paid back the loan.
As far as interest rate is concerned, it depends on your past good or bad record of paying past loans. However, irrespective of the record, you can assure a low rate on the loan once you have made a good amount of down payment to the lender. Repayment of the loan can be made in 5-7 years.
There are two ways of car loans availed
1. Secured Car Loans
2. Unsecured Car Loans
1. Secured Car Loans: - A secured car loan is a loan wherein you have to pledge your car to the lender, thus enabling the lender to acquire the car if the repayments are not made in full. Since you are providing security, you get several benefits like lower interest rates, freedom to choose the repayment term, and ability to borrow as much as you want.
2. Unsecured Car Loans: - An unsecured car loan is a personal loan offered solely for vehicle purchases. They usually come with additional benefits such as discounted vehicle inspections, car parts, breakdown cover, etc. Unsecured car loans are offered to borrowers who do not have any assets, or do not want to put any assets under obligation. An asset kept as collateral can be used for the purpose of recovering the balance of an unpaid car loan. With an unsecured car loan, none of your possessions are at stake.
In India car loan is given for new cars, pre-owned cars and car cash-in. There is no upper limit for the amount of a car loan. A maximum loan amount is 2.5 times of your net annual income. Moreover loan can be applied jointly in that case your spouse’s income can also be considered. The loan amount for new car includes finance for one-time road tax, registration and insurance premiums. There is no ceiling on the loan amount for new cars. You have to deposit margin money for new car loan and in some bank for used car loans also. For instance State Bank of India (SBI) country’s largest lender takes margin money on new/used vehicles: 15% of the on the road price.
The maximum repayment tenure SBI has fixed for a salaried person is 84 months and for the professionals and self-employed is 60 months. As a processing fee 0.50% of loan amount has to be paid upfront i.e. minimum amount is Rs. 500 and the maximum is Rs. 10,000. In case of rejection of application after pre-sanction survey 25% of processing fee is retained.
