Owning a car is a luxury that most can’t afford. Purchasing a car in India is not something that everyone can afford. Dipping in to the savings account will put a huge dent in your savings account, which an individual would have kept for a rainy day. With the introduction of car loans, the process of affording a car has become simple for the middle class. Through a car loan a customer can easily purchase a car of their choosing, whether it be a new or a secondhand car. In a car loan, the financial institution provides the loan amount to the customer for the purchase of the car. The car loan is provided following certain terms and conditions. The repayment of the car loan is done through equated monthly instalments (EMIs). The loan amount is provided at a certain interest rate. The repayment for a car loan is done through monthly instalments for a certain fixed tenure period. Repayment on a car loan done through monthly instalments make the process easy for the customer.
Features of a car loan:
- A car loan helps the customer purchase a better car than the one available in their budget.
- Through a car loan the customer can get a vehicle quickly, without spending too much time gathering the funds for the loan.
- Car loans are secured loans. Which means that the car itself acts as collateral or security for the loan. If the customer fails to make repayments the financial institution has the right seize the car.
- The maximum loan amount on a car loan vary at different financial institutions.
4 ways to get good car loan interest rate:
- Credit history:
Before providing the customers with the loan amount, the financial institutions conduct a background check on customers credit history and financial activities to ensure that they would not have any problems in making the repayments. Any outstanding debts or failure to make repayments in the past may reflect negatively on the customer. Thus, maintain a good credit history before applying for the loan will help the customer in getting good car loan interest rate.
If the customer is applying for the car loan from a financial institution where they already are a customer, they can always negotiate for good interest rates on the car loan. As the financial institution will want to retain the individual as a customer, they may provide good car loan interest rate through negotiation.
Before deciding on the financial institution for the car loan, the customer should research on the terms that are offered by different financial institutions. There are chances that some other financial institutions may offer terms that suit the customers requisites best. Thus, the customer should conduct a lot of research before deciding on a financial institution for a car loan.
- Short tenure and large down payment:
A long term may seem attractive to the customers, but they end up paying more in interest. Thus, the customer should opt for a short tenure for the car loan and make a large down payment. A large down payment in the beginning of the loan will help the customer in making the repayments on the remaining loan at a short tenure which will also help the customer in getting low car loan interest rate.