As the purchasing power of most of the people in India is increasing rapidly, purchasing a car has become almost a status symbol for them. Furthermore, this leads them to car loans, which enable in buying the vehicle of their dreams without any hassles. Still, it would be a wise to take all the aspects of these loans into account before the loan seeker finally submits an application for the loan.
Whenever a person decides on the loan amount, he or she must note that banks in India provide two to three times the annual salary of the applicant or six times the annual income of self-employed people for purchasing a car. To buy a new car, one can get 90-100 percent amount of the ex-showroom price of that car. However, as for the used cars, the loan amount is kept between 80 to 90 percent of the car price. If the income of the borrower is not sufficient, then the income of borrower's relatives or spouse can also be included in assessing the repayment capability.
In most cases, the banks take the car as security against the loan amount. This simply means that while the borrower own and drive the vehicle, it is actually being used by the lenders for the purpose of security for the loan. Successively, it also implies that some crucial papers of the car will be returned to the borrower only when he or she will completely pay off the loan amount.
As far as the interest rate is concerned, it depends on the borrower's good or bad credit history in paying off the past loans. But, irrespective of the record, one can assure a low rate on the loan once he or she has made a good amount of down payment to the loan provider. The repayment of the loan can easily be made in five to seven years.
In India, the documents required for taking the car loans include identity proof, proof of residence and the proof of income. The salaried people should submit their latest salary slip or form 16 and the bank statements of certain time period. If the loan seeker is self employed then bank statements or the IT Returns of last two years will serve the purpose of proof of income.
While applying for a car loan, one should also be prepared to pay processing fee on the loan amount. The fee may vary from bank to bank and the lender will give the borrower a loan amount after subtracting the fee amount. Thus, the fee will reduce the actual amount one receives in his or her hands.
It is decisive for the borrowers that they search for ideal car loans and study various rates and other terms-conditions offered by various banks. By keeping the requirements and circumstances in mind one can easily find an appropriate deal.
