3 Types of Car Loans
We live in a society where people are different in every aspect whether it is in terms of geographical area, languages they speak or the income they earn.
From a perspective of various income levels of people, each individual has a different spending power and therefore it is important to keep this factor in mind when we look at what goods or services can be offered to any individual.
For most people, if they want to fulfil their dream of buying a car and do not have the necessary funds available in their savings bank accounts, one of the services that can considered, is of easy car loans.
What is a Car Loan?
A Car loan is a Personal loan. When a person wants to buy a new car and does not have the sufficient amount to buy the car, he borrows funds from a bank or any other financial institution.This means the lender will pay off the car in full and in return the borrower will have to pay monthly installments to clear his debts. A rate of interest will be charged on the payment made; and this rate may vary from bank to bank.
Features of a Car Loan:
Some of the features of a Car loan include:
• The amount of the car loan is calculated on the ex-showroom price of the car.Most institutions lend up to 90% of the car price.
• The other important factor that is considered in calculating the loan amount, is the Income of the individual who is availing the loan.
• A co-borrowers income can be included in order to increase the loan amount.
• Interest rate offered can be either floating or fixed.
• Loan tenure in most cases is maximum up to 7 years.
3 Types of Car Loans:
Car loans can be majorly of following three types:
1. New Car Loan:This type of loan is designed specifically for people who want to buy a new car. New car loans basically cover alarge range of cars and can give higher lending amounts than other loans. New car loans usually provides you an option of borrowing the full amount of the car. The interest rate offered on these loans is the least of the three types of car loan.
2. Used Car Loan:This loan is for the people who want to buy a second hand car and do not have the sufficient amount for it. In case of a used car loan the age and model of the car plays a very important role in determining your loan eligibility.
3. Loan Against Car:In this kind of the loan the lender provides you loan against your own car. The loan facility is available in both cases – if you have purchased the car in case and even if you have taken the car through a car finance scheme. This kind of a loan facility is usually availed when the borrower is in extreme need of funds and does not wish to avail a personal loan. The rates offered on a Loan Against Car are normally 2% lower than rates offered on a Personal Loan
Eligibility:
• An individual should be a salaried employee, self-employed individual, self-employed professional.
• An individual whose annual income is upto 2.4 lakhs (if salaried individual); 1.8 lakhs(if self employed individual); 2 lakhs(if self employed non-individual).
• Minimum age of the applicant should be 18 years.
• Maximum age of the applicant should be 70 years.
• He should have a minimum of one year experience of work with the current employer.
Documents Required:
• Age Proof.
• ID Proof.
• Application form.
• Photograph.
• Residence Proof.
• Income Proof.
• Bank statement.
• Signature verification Proof.
• Pro-forma Invoice or Rate List.