Things to consider before availing of a car loan

The borrowers who are looking to buy a car with the help of a car loan have to fall under the eligibility criteria set by the particular institution and provide the lender with some essential documents. But before applying for a car loan one should select the car model that he or she might want to purchase as the bank will provide a credit on the basis of its price. Then the car has to be insured and hypothecated for future security. After these procedures are over, then the lender and the borrower decide the tenure of repayment and EMI procedures. Further one has to keep on paying the instalments along with interests until the debt is over.

Further, we are going to take a look at the important aspects that should focus on before applying for a car loan:

Eligible brand and model- A car loan is accepted in both the cases where the manufacturer may be national or international. Though the prices of the models might vary between the Indian brands and the international brands, car loans can be sanctioned on any approved car model, although the funding is under the bank’s discretion.

Interest rates- Interest rates offered under the scheme of a car loan often vary between a range of 10% to 18% p.a. Then again the rate is decided after the specific model and brand is decided and also depends on one’s loan tenure, credibility profile, creditworthiness, etc.

EMI installation- While repayment of the credit the facility of EMI installation is provided, where a borrower has to deposit his monthly EMI amount within the due date. This EMI amount varies from one borrower to another based on their loan tenure, loan amount, and interest rates. However, there are options to pay in a ransom, in that way one reduces the interests to be paid.

Repayment tenure- The repayment tenure offered by car loan schemes is quite flexible and it ranges between periods of 1 to 7 years. One has to repay the loan that had been credited to that individual within this tenure. Failing to do so might have serious consequences as the lender can trace you with the help of your certified documents.

Down payment- Under this facility, a borrower is allowed to pay the loan in a ransom. This method of repayment might be preferred by people who want to abstain from paying high-interest rates. Once the loan is paid in a wholesome down payment, it cuts down a portion of the interests charged and thereby saves some amount on the borrower’s part

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Miscellaneous charges- Except for the principal amount and the added interest rates, there are other minimal charges that are to be paid while availing of an ICICI car loan. Some of the charges may include processing fees, pre-closure of account, stamp duty charges, late payment fees, and also part payment charges are included while repayment of the loan.

These were some of the important criteria which should be remembered before availing of a car loan. Also, one must not forget the procedures of repayment as it can affect an individual’s credit score. Moreover, constant delay of EMI deposits can even have serious consequences in some cases. Thus one should look into the options of repayment and select a suitable tenure, within which he/ she can easily pay back the loan amount. Also, while in confusion regarding the policies of the institution, always consult someone or simply ask for guidance from the help desk because one should be completely sure before availing of any loan and choose a needed amount only because no one wants to pay an extra amount.

Author’s bio:

Gaurav S. Khurana is the Founder and CEO of Dialabank and has had a great career in the Banking and Financial Services Sector. He has an experience of 18 years in the sector and has worked at Senior Roles including National Sales Head at ING Investment Management India and as the Vice President Citibank. A post-graduate from IMT, Ghaziabad. Gaurav started his career as a Named Account Manager in Xerox.

Being a part of this field for a long time now, he has written many informative articles and blogs benefiting and assisting many in making decisions regarding the policies provided by various banks and non-banking financial companies such as the icici car loan policy.

Gaurav S. Khurana is the Founder and CEO of Dialabank and has had a great career in the Banking and Financial Services Sector. He has an experience of 18 years in the sector and has worked at Senior Roles.