These days, it has become a lot easier for you to buy a car that meets your preferences. A number of financial institutions and banks have come up with lending schemes that enable most car aspirants to fulfill their long-cherished dream. Representatives of most renowned banks are present in the car showrooms just to make the process of availing vehicle loans more hassle-free. You may end up achieving up to 100% of your vehicle cost as a loan once you meet their eligibility criteria.
How Much Loan is Adequate?
The equated monthly installments that you need to bear should be worth 15-20% of your net earnings per month. However, purchasing a vehicle shouldn't disrupt your monthly household budget. You’ll need to submit the ownership of your vehicle for obtaining a car loan. This is considered to be a secured loan as the lender gains security in the form of your car. In the event you fail to repay the borrowed amount, the vehicle may be repossessed by the lender and sold for recovering the loan amount.
The Loan Tenure for A Vehicle
A vehicle loan is usually approved for a span of 1 to 7 years. The tenure of your loan can be assumed on the basis of your financial strength. You’ll need to bear a lower rate of interest based on the entire loan amount when the tenure is lesser. A low tenure leads to a quicker reduction of the outstanding loan based on a high EMI. This is why you need to pay a much lesser amount of interest. You may calculate the amount of repayment with the help of a car loan emi calculator. It’s much easier to sell off a vehicle without a loan. It makes things more hassle-free when you wish to upgrade to a bigger car or re-sell your car earlier on.
Due to a longer tenure, you’ll bear an easier EMI on your wallet also while experiencing a lesser cash elasticity. When you opt for a longer term, you’ll even enjoy a lower interest outflow due to the lowered lending rates. There’s a base lending rate applicable with most of these loans which a bank arrives at while considering the lending rate suggested by the RBI.
Documentation Required in Support of a Loan
A few good documents like your driving license,passport, PAN Card (Permanent Account Number) are necessary to avail a bank loan for funding your purchase. The Adhaar Card, Passport, and Voter ID card are amongst documents that can be produced as proof of address. You’ll even need to furnish a few of your latest photographs and proof of your age.
The latest statements of income tax, bank account statements depicting your salary for the last 6 months and the salary slips for the last 3 consecutive months will also need to be submitted. Along with these documents, you’ll even need to submit copies of all relevant documents pertaining to your vehicles. Therefore, it’s in your best interest to maintain a file for keeping all necessary documents.
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