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Car Loan

A Guide To Loans Against Cars

A refinance loan involves taking out a new loan at a lower interest rate or extending the repayment period to lower your monthly payments.

A refinance loan involves taking out a new loan at a lower interest rate or extending the repayment period to lower your monthly payments.

About Car Financing

Many people once were unable to afford to own a new car. For many people, this is still a huge milestone. To buy a dream car, you need a lot of money. The process of buying a new car is no longer as challenging these days as most banks readily offer car loans.

These are brand new car loans provided by new car dealerships. As a brand-new car owner, you can expect to have easy access to service and spare parts, as well as brand-backed warranties.

How To Get A New Car Loan

The step-by-step process of taking out a car loan follows below. The term and factor list in our description may help you understand the process.

Check your credit report

Before you apply for a car loan, you should know your credit score. Scores have a direct correlation with loans you take out from the bank, as well as interest rates. Due to the increased risk of you defaulting on the payment, they will also charge a higher interest rate. Likewise, the reverse is true.

Calculate the borrowing amount

By now, you would have already decided. Next, it will be time to figure out the EMIs a person may afford. Down payments will lessen the burden on the loan. In addition, you must determine how long the loan will last. An increased loan term means a lower EMI.

Choose the right lender

Find a lender that offers the lowest interest rate. Some credit unions offer lower interest rates than large banks. However, their services may be substandard.

Apply for pre-approval

Once you have selected a lender, you can apply for pre-approval. Your dealer may be able to assist you with pre-approval and financing. If you are pre-approved by five lenders, you can choose one in 30-60 days.

New Car Loan Eligibility Criteria

There are qualifications for obtaining a new car loan, and not everyone will qualify.

  • The minimum and maximum age - From 18 to 65 years of age
  • The loan amount - Many banks provide loans up to 50 lakhs. The maximum loan amount in some banks is Rs. 1 crore.
  • Net income per month - Monthly income of at least Rs. 10,000
  • Employment Type - Salaried or self-employed.
  • Type of car - The loan amount varies depending upon the new or old car.
  • Work ExperienceA minimum of one year’s experience in the field is required for the position to be salaried. The self-employed must be in business for five years and have a minimum two-year ITR.
  • Value of car - Depending on the ex-showroom price or on-road price of your new car and the sale value of your old one, your loan value eligibility differs.
  • Residence - A city, a town, or a rural area.
  • Stability of residence - A minimum of one year of residency is required at the current address.

About Old Car Financing

Used car sales are booming when the automobile industry is struggling with sales declines. Several national and private banks and financing companies are financing used cars due to the growing demand for vehicles.

Loans for used cars in India are much more challenging to obtain than those for new ones. Banks offer 70-80% financing of the used cars, while it’s up to 90% for the new cars. Similarly, the interest rates and loan terms for used cars are higher. Yet, there are options for getting a used car loan at a low rate and for an extended term.

Do you know how to finance a used car?

If you are taking out a loan for a used car, be sure to consider the type and basic requirements. The following steps will help you obtain a loan for a pre-owned car.

  • Car type and model
    Select the type and model of car that fits your needs while still staying within your budget. A car loan is usually approved based on the age and condition of the model of the car. In addition, borrowers can get used car loans more quickly if they choose a relatively new model.
  • Calculate the value of your old car
    Calculate how much you need to pay after you select the car model. A small loan with a simple installment scheme may be appropriate if you can pay lump sum advance payments. It will let you know how much financing is necessary for buying used cars.
  • Identify your requirements
    The monthly payments will depend on the loan amount and loan term you select. Most of the time, it depends on your income and future projections.
  • Verify and submit the documents
    A bank or other lending institution will need authorization and proof of income stability before lending money. Banks require different documents. For more information, contact the bank. The bank issues the loan to the borrower after submission of all the required documentation.

The Process To Apply For A Used Car Loan

  • Apply online or offline to get a used car loan. The first step is to fill out a loan application and submit it.
  • Gather the necessary documents and upload or submit them for verification.
  • Afterward, we will determine your eligibility after verifying your documents.
  • You will receive the funds once the loan is approved. After submitting documents, loan disbursal may take anywhere from 24 to 36 hours.

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