A guide to take an Auto Loan

With India heading towards development, the purchasing power of Indian customers is growing rapidly; purchasing a car is almost a priority. Now when it comes to purchasing a car there are many factors which one should take into consideration like which car to buy, whether it should be a new or a used car, buy by paying cash or avail a loan, which loan should one go for, insurance with IDV value and many more. It’s not only a buying a car, but also you will have to look after the aftersales and car maintenance.

One should take every option into consideration while purchasing a car. When it comes of Auto loans be it for a two wheeler or a four wheeler it all depends on your loan eligibility and your cibil scores.

Funding

When deciding on the auto loan amounts, usually the banks provide 90-100% funding on new cars and 80-90% on used cars. There are different criterias for a self-employed person and a salaried person. You can also include your spouse’s or relative’s income, if your income is not sufficient to meet the criteria to avail a car loan.

Income Proof

There are different norms in terms for documentation requirements in different banks. Mostly it is identity proof, income proofand proof of residence. Requirement for salaried people is :Form 16, current salary slip, and six month’s bank statements. If loanee is a self-employed then two year’s bank statement will serve the purpose of income proof.

Eligibility

Once your income proofs are submitted to the lending bank, the bank will check your car loan eligibility and will decide on the interest rate depending on your cibil scores. As we know your cibil scores are a direct reflection of default payments you must have made. If your cibil score is good then you can ask upfront for a low interest rate or avail some kind of discount on processing fee, but that completely depends on the discretion of the bank.

Processing Fees

Speaking of processing fees you will have to pay the processing fees. Every bank has their own processing fees, charges and norm.You will have to learn and understand the processing fees while opting for an ideal lender. The lender always deducts the processing fees from the sanctioned loan amount. You can avail a processing fee discount if the bank has offers going on while you are purchasing a car and availing an auto loan.

Foreclosure Charges

While searching for an auto loan, one should also check the foreclosure charges aid out by the lender. For some banks the foreclosure charges will be less but for some it would be high and also you will find some banks which do not charge any foreclosure charges after a certain amount of time. For Example: Some banks don’t charge any foreclosure charges post six months of EMIs paid.

Discounts and benefits

Different banks give different discounts depending on the class and variant of car you are buying, make the most of it. If you are attached to a particular car and want to buy it always check if there are exclusive discounts or benefits and make the most of it.

Buying a car is luxury, but makes it even better if you are availing all the benefits while buying it!

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