It is everyone’s dream to have a branded car along with the house. Car not only makes your life comfortable, but also reduces many difficulties. Coming to the office while battling public transport or going out for a weekend trip, everything becomes very easy.
Earlier, buying a car was a big deal for anyone, as a lump sum amount had to be spent for it, but now it has become very easy due to the availability of loans easily.
Banks and non-banking finance companies offer car loans on easy monthly installments, which has made buying a car very easy now. This does not spoil your budget and also provides convenience.
Lending companies give loans on both new and used cars. However, the interest rates on these two are different. The interest rates for new cars range between 9.25 -13.75 per cent, while for used cars the interest rates range between 12.50 and 17.50 per cent.
Who can take a Car Loan?
Before applying for the loan, there are some conditions, which you need to keep in mind. This includes information about age, minimum salary, type of job and residence.
Documents Required for Car Loan
1. Proof of Identity (PAN Card,
2. Passport, Driving License etc.)
3. Proof of Address like Voter I Card,
4. Passport Age Proof
6. Car Documents Three Months Salary Slip,
7. Six Months Bank Statement,
8. Income Tax Returns Proof of Income like Income Tax Returns Some companies use the car. Do not finalize loan without copy of insurance and driving license.
When you buy a car by taking a loan, it is mortgaged with the lending company. This gives them the right to confiscate your property in case they are unable to repay your loan. If you are not able to pay the monthly installment on time, then they can pick up the car and take it away.
Hypothecation letter is also a part of the car registration process. Once you repay the loan, you can remove the hypothecation of the lending company from the registration papers.
To remove the hypothecation, you will have to go to the concerned registration transport office with no objection certificate, car insurance papers and address proof.
It is important to note here that it is necessary to take NOC from the company giving the loan. After this, give it to the insurance company and issue the insurance paper in the name of the new owner.
Car Loan Amount
The loan amount depends on your age and income. How much loan you get for the car depends on the lending company. At this time, generally you can get a car loan up to four to six times your annual income.
Up to 80-90 per cent of the cost of the car gets financed. Some banks, however, finance up to 100 percent. This could be the ex-showroom price or the on-road price.
Ex-showroom price is the amount paid to a dealer for buying a car. When you bring the car for plying on the road after paying registration charges, insurance, road tax etc., then it is the on road price. When you go to take a loan for a second hand car, then the expenses incurred in re-registration are not covered.