Once a person becomes capable to satisfy the basic needs for survival, it looks for certain luxuries. A person often tends to seek an up-gradation of living standards. Owing a car is one such instance.
During the olden days, only the rich and privileged could afford a car. However, this is not the case today. Anyone from a sustainable financial background can afford a car, thanks to the several schemes and low interest car loan offered by the banks.
You need to visit your nearest car showroom where you'll come across bank representatives. If you can meet up with specific criteria, you'll be furnished with the cost of the vehicle as a loan.
What amount of Loan Will You Be Granted?
Buying a car loan is not associated with your budget; however, EMI should not exceed 20% of your monthly income. You need to keep in mind that the loan has been given to you against the ownership of your car.
If you fail to reimburse the loan, the bank has all the right to seize your car and sell it to recover the loan. However, you have to ransack the market to come across an authentic lender who will offer you a low interest car loan.
Tenure of the Loan
A bank furnishes the loan from anywhere between 1-7 years. It depends on your repayment capacity. Based on your financial ability, you can opt for the suitable tenure. The lower the tenure is, the lower the interest. Since the mandate is less, you have to pay a higher EMI, and hence you'll have count lesser interest.
How to Find a Low-Interest Car Loan
Mentioned below are some factors which will help you get a low interest car loan sanctioned:
1. Having A Secure Job: A bank will give more importance to your loan application if you have a stable job or you are holding onto your job for a long time. Changing your job signifies instability.
2. Having A Good Credit History: If you have a good credit history, you have more chances of having a low interest car loan and a good deal. Paying monthly installments on time and keep a good credit utilization ratio creates a good credit history.
3. Offer Deposit: Lots of bankers will be willing to lend you the full amount to buy the car. If you can afford a cash deposit or own a car to trade-in, you can borrow less and get a lower interest.
4. Shop Around: Never accept the first offer you come across, shop around and see what the different suggestions provided by different bankers. Question about the loan terms and whether the rates are fixed or variable and if there is any pre-payment penalty.
Documents Required
To get a car loan a person needs to produce certain documents such as a proof of identity for which you can provide your passport or a driving license. The person is also required to submit proof of age and recent passport size picture.
For the proof of income, the person is required to submit the salary statement, at least 6 months of bank statement and income tax return. A residential proof is also required to avail a car loan.
Conclusion
On a different note, the market is filled with frauds. While looking for low interest car loans, beware of falling prey to fraudulent activities. When you are going to invest on something as expensive as a car, it is always smarter to buy from the trusted supplies and contact directly to the bank to avoid any fraud and miscommunications.
Do a proper research and comparison before choosing a lender. Check the documents carefully and understand the terms and conditions before signing them and handing over to your bank agent.
