Car loan processing has come a long way from the time when you needed to visit a bank branch. Now, your loan is processed simply from the car dealership only from where you plan to buy your car. And digital revolution has now enabled banks to even disburse loan online.
In a nutshell, you can easily avail an auto loan. However, you need consider a few essential points before applying for an auto loan.
#1 Rate of interest
Car loans are now available at as low as 7.35% per annum. You can bargain for a lower rate if you have an existing relationship with the bank. However, if you are getting a very good deal then it is better to read the fine prints because there are no free lunches. Check for foreclosure charges, late payment fees, and processing fees among others.
#2 Loan tenure and amount
You can avail up to 100% of ex-showroom price as an auto loan amount. However, it is better to pay as much as you can in the form of downpayment. The higher loan amount will attract higher EMIs and hefty interest amount.
If you can't afford higher EMIs, you can take a longer repayment tenure to reduce the amount of EMIs. Normally, banks offer up to 7 years of tenure on auto loans. But keep in mind that longer tenures will attract more interest.
#3 CIBIL Score
Apart from your age, occupation, and income; you also need to have a good CIBIL score to secure an auto loan easily. As per market trends, a CIBIL of 700 or above is a good score. If you don't have a credit history, it is better to start using a credit card and pay its dues on time to build a healthy credit score.
#4 Processing fees
From evaluation your loan application and verification to preparing the paperwork; a cost is involved. Banks recover this cost in the form of processing fees. It can be fixed or a particular percentage of your loan amount. It worth noting that majority of lender who offer loan at a cheaper rate of interest generally charge a higher processing fees.
Documents including current address proof, photo ID proof, income proof, and bank statement are required to apply for a loan. Keep these documents handy before applying to avoid last minute hussle.
Hope this will help you get a auto loan easily!