An adage goes this way- “Knowledge is more powerful than money”. Holds true in a case when you research and find out the best car loan option that has the lowest interest rate and minimum processing fee. Before you choose a car model and visit the car dealer to bring home your favourite car, you should spend some time analysing some figures and prepare a set of questions if you want to opt for a car loan. Answer these 6 basic questions that will unarguably guide you to the best car loan in India.
1. What is the interest rate charged for the car loan?
Yes, you must be interested in the interest rate! The first question that you should ask regarding a car loan should be the interest rate that the bank would charge you on your loan. There are many banks that offer car loans at low-interest rates. Some banks offer loans at rates as little as 9.5% per annum.
2. What is the total amount being financed by the bank?
It is always advisable to pay around 20% of your car price on your own and get the remaining amount financed by the bank. However, many banks offer loans up to 100% of the ex-showroom price of the car. Applicants should try to follow the 20% rule under which they should not take a loan which would eat up more than 20% of their monthly income in EMIs. Paying a higher EMI amount every month can put a strain on your finances.
3. What is the final price I will have to pay for the vehicle?
Some lenders charge borrowers heavily for processing, documentation, prepayment, foreclosure, late charges, default in payment, etc. This increases the overall amount paid for the car. The borrower should check the final amount that he will have to pay over the period by using the Ruloans Car Loan EMI Calculator.
4. What fees are included in the car loan?
Some of the most common charges and fee levied on the customer are loan processing fee, documentation charges, credit report charges, registration certificate collection charges, stamp duty, part prepayment charges, foreclosure charges, late payment charges, amortisation schedule charges, loan cancellation charges, swap charges, bounce charges, etc. You should compare the additional fee and charges of various banks before choosing your lender with Ruloans.
5. Can I make payments early without any penalty?
Many banks levy prepayment charges, foreclosure charges and other fee when the borrower wants to pay off his debts before the tenure ends. You should always choose a bank that charges you the minimum in such events. Many banks do not levy foreclosure charges after two years of the sanctioning of the loan. Those banks should be given a preference which levy low or no foreclosure charges.
6. What supporting documentation do I need for a car loan?
In order to get the loan sanctioned, an applicant should provide a range of documents to show the bank that he has the ability to repay back the loan amount.
- KYC documents for identity proof, address proof and age proof.
- Bank statement
- Income proof such as Form 16 or latest salary slip, income tax return with complete audit report of the last two financial years, etc.
- Business stability proof/ownership proof
- Employment stability proof
- Partnership deeds
A person who keeps all these documents handy at the time of applying for the loan gets his loan sanctioned and the amount disbursed in very little time.