Car Loan Basics for Beginners
The thought of buying your desired four-wheeler is itself quite exciting. It is like taking the first big plunge towards a happy and prosperous life. A car cuts down your travelling hassles and extra expenses while improving your societal status. But what if you can't afford the car that you desire to own? You can't obviously spend all your savings on your car. In such a situation, it is a car loan that comes to your help. These are financial advances made by banks or financial institutions to help people buy the desired car for private or commercial use. At present getting a car loan from banks has become very easy and convenient. An easy monthly instalment option is that you need to repay the car loan amount. So, this becomes a win-win scenario, where you can act smart by purchasing the ideal car for yourself and also avoid the unwanted debt. But when you are availing a car loan for the very first time, it is extremely important to know the car financing basics before you take the plunge. Hence as a beginner, enlighten yourself with the below-mentioned facts about car loan:
Eligibility Criteria for a Car Loan
The basic eligibility particulars to get a car loan are as follows: The applicant should be residing in India, be it in rural, semi-urban or urban India. The age limit of the applicant for applying for a car loan should be at least 18 years or a maximum of 75 years. He/she should have a monthly income of Rs. 10,000. The applicant should be either a salaried or a self-employed individual with at least 2-3 years of working experience. The applicant should have an approved residence with a good amount of parking space inside or outside. He/she should have a residential stability of at least one year. Documents Required for Car Loan If you are eligible to apply for a car loan, you should move to the next step of documentation. In order to make sure that the loan process is smoothly carried on by the banks or any other financial institution of your choice, it is necessary to provide the following mandatory documents: A valid identity proof - The applicant should provide a valid ID proof which can be a PAN card, AADHAR card, driving licence, passport or any other identity document issued by the government. An age proof - As the applicant should be at least 18 years of age, he/she should provide a supporting document that states his/her age clearly. It can be a driving licence, passport, ration card, school leaving certificate or any other government document that mentions the age. A valid address proof - It is extremely crucial to provide a government issued document that has the present address mentioned. It can be an AADHAR card, PAN card, etc. An income proof - There are ideally two types of employment: salaried and self-employment. The salaried individuals should submit current 6 months salary slips, last 3 months bank statement, Form-16, updated ITR etc. whereas the self-employed individuals should furnish past 3 months bank statement, balance sheets, P&L accounts, ITR etc. Signature verification - To ensure your signature is unique, a signature verification proof is required. Recent photographs - Two copies of photographs, ideally two passport and stamp size photographs should be kept handy.
How to Avail Car Loan?
Know your budget - It is very important to know your budget well to know what kind of car you can afford. You should evaluate the expenses that will incur the moment you will apply for a car loan such as car maintenance costs, car registration cost, etc. Plan the amount to repay - According to your budget, plan the monthly instalment amount that will go into paying back the amount. If required, with the help of the car loan calculator, calculate your interest rate, the tenure of the loan period and the amount to payback in EMIs. Get approved first - It is crucial to get your car loan approved, to make the process of car loan easier and flexible for you. Just before you are ready to shop for the car of your choice, get it approved. Go for car shopping - This is the last step when you are ready to shop for the car of your choice. Research beforehand to know which car will be best for you and will suit your needs. Remember to purchase a car that fits your budget. Avail offers & discounts- Deciding upon the right time to purchase the car especially during the year ending and festive season can help you gain heavy discounts as banks offer low-interest rates, waivers on processing fees and other offers during these times. Watch out for offers and discounts during festive seasons. Car Loan Application and Approval Process A car loan can be applied both online and offline. Applying it online is the easiest way to reduce the hassles. Just visit the bank portal with which you want to place the application or you can place the application through a reliable third-party website. The steps that are involved in the filing of application and approval of car loan are as follows: Check your credit score - Credit score is a very important aspect of the car loan. As a beginner first check your credit score as banks offer loans to candidates having good a credit score. Fill up the application form: In the next step, place your loan application with the desired bank along with all the mandated documents. Make sure that the form is duly filled and you provide all authentic documents. Application verification- The bank will verify your documents and check your profile as well as credit score to assess your eligibility. If you are found to be eligible your loan application will be processed. Loan approval- Banks take 1 to 5 days to approve a car loan. Though, this period might vary from bank to bank depending on the candidate's profile. Disbursal of the loan- After some time of loan approval the amount will be disbursed either to your account or directly to the car dealer from whom you will be buying the car.
How Does Car Loan Work?
The applicant needs to decide the car model at first. Then the bank will provide a maximum of the funding based on the price of the car model. Once this is done, the applicant will have to insure and hypothecate the car for further safety. It is then that the interest rate is decided and the process of EMI is ascertained. EMI should be paid without any failure to ensure the car doesn't get repossessed. Whatever problems you might face, you have to pay the loan within the tenure.