Cars are never just a means of transport; for many of us, they are a passion, while for others, they are a necessity. After investing in a home, most of us make a significant investment in a car. While purchasing a car can be incredibly exciting, it also involves a lot of work. This work includes exploring financing options, add-ons for your car, and the best cars within your price range.
Festive seasons in India are followed by a lot of offers and deals on vehicles, adding to the season’s festivity. Whether it’s Diwali or Durga Puja, there will be discounts and deals flowing on a wide range of products, and it’s in your best interest to take advantage of them before they’re gone.
Let’s pave the way for your new car !
The first step is to choose which car you want to buy that is also a practical option for you and your family. It is wise to choose a car that meets your necessities without compromising your dreams. As a beginner driver, you should avoid purchasing a high-end or brand-new car. Pick a car that serves the primary goal.
Few parameters which can help you decide which car model to buy :
- There are various options on the market, ranging from hatchbacks to sedans to MUVs to SUVs, depending on your needs.
- Fuel-type – Choosing the type of fuel your car will use is important since over time, it will add significantly to your monthly expenses. Whichever matches your budget best—petrol, diesel, or CNG—should be used. There is also a new addition in the market of electric cars which are efficient, eco-friendly and will also have less impact on your monthly expenses , you can consider these types of cars too.
- Finally, based on your level of comfort, choose an automatic or a manual transmission.
Now let’s start the process of car loan.
Test Drive
When purchasing a new or used car, never miss the chance to take a free test drive. It will assist you in making a choice that will likely be one of the biggest dreams you’ll ever fulfill with your hard-earned money. Your dream car is an emotional and financial investment, therefore you would not wish to make a quick decision about it.
Eligibility
Although most of the top car loan providers have different eligibility criteria for offering car loans, there are some common requirements. To give you a general idea, check out the list below:
1) Age of the Applicant – 25 – 60 years
2) Income Tax Returns- 3 years (Minimum 30 percent of the loan amount
3) A constant source of income (Self-employed or Salaried)
4) Place of Residence – India
5) Appropriate credit profile
Credit Scores
Before you start making plans to apply for a car loan, you should first set up your credit score and credit history. The first step is to visit an RBI-approved credit bureau website, such as CRIF, and assess your creditworthiness. A higher score increases the likelihood that the loan will be approved and lowers the interest rates. If one’s score is more than 700, there is a higher chance that the loan will be approved. Pay all your bills on time to maintain a good credit score.
Loan details
When considering a car loan, there are many things to consider. The following lists the most significant ones. Always inquire about them with the bank you plan to borrow money from.
– Loan Tenure: 1 -7 years
– Interest Rate: 7 percent and above
– Processing fee: Rs 6000+ (Government sector banks charge documentation charges)
– Guarantor Requirement: Varies with bank
Down payment and EMIs
Car dealers today have partnerships with numerous banks and lenders, opening up the prospect of 100% financing. Even while it could sound quite tempting, once you start evaluating your options, you’ll realise that the bigger the loan, the higher the EMI. Make sure you have the majority of the money available as a down payment, which will ultimately result in a smaller loan amount and reduced EMI.
Documentation required
The list of documentation includes proof of identity, (such as PAN, Driving License Number, Aadhaar etc) your income proof (salary slips for last 3 months, Form 16 for last 2-3 years etc), credit and bank history (bank statements for past 6 months), proof of residence (electricity bill, driving license).
Car loans can benefit you in several ways such as:
- Makes it easy for you to own your dream car.
- You get the flexibility to choose the tenure of your car loan.
- Car loan for buying a used car.
- You can negotiate on the interest rate with the loan provider.
- No collateral is required.
- You get the flexibility to choose the payment method.
- Flexibility to choose the fixed or the floating interest rate option.
You wouldn’t want to make a hasty decision on your ideal car because it is an emotional and financial investment. Based on the information gathered in this article, we hope that purchasing your new car will be simple.