Owning a car is no longer considered a privilege, it is more of a necessity today. With the market flooded with a plethora of car financing options, consumers in India generally have a tough time selecting the right kind of loan for themselves. An ideal car loan deal would include benefits like low-interest rates, flexible tenure options, flexible monthly instalments options and the feature to choose either a fixed or floating interest rate, as per the need of the customer.
Picking the right type of car loan can be a difficult task. But knowing what is required according to the type of car purchased will always help a borrower make the correct decision. Here are a few tips to help borrowers zero in on the best deal.
- Select a Car that you can buy:
As a thumb rule, borrowers should choose a car loan that suits the model of the car purchased and also according to the repayment capability of the individual.
- Higher loan value for salaried employees:
Salaried employees can get higher loan amounts based on their annual income, with banks approving loans based on that amount. So, individuals should choose a loan that offers them the maximum quantum of loans.
- Loan Margin: Certain factors like down payment amount and loan margin also should be considered. A higher down payment amount would help a borrower save on interest rates and also complete his debt sooner than expected.
- Interest rate type: As far as interest rates are concerned, floating interest rates work well for a borrower, as market fluctuations and rate reductions might be beneficial in the long run.
- Loan Coverage: Banks generally offer loans up to 80% or 90% of the vehicle value. This might vary on an individual basis and also on the type of car buying.
- Flexible tenures: While choosing the tenure of the car loan, borrowers must ensure that the bank offers flexible tenures, which can be altered if part payments are done.
- Other Charges: Other types of charges that are levied along with a car loan like processing fees, documentation fees, prepayment fees, etc., should also be evaluated before confirming the required deal.