Cars have become a thing of daily use these days. It has also become much easier to buy a car as banks & NBFCs are ever-ready to offer car loan right inside the showroom. All you need to have is a satisfactory credit score & margin money. In some cases, banks finance up to 100% of ex-showroom cases under tie-up with the leading car manufactures. Therefore, cars have become quite affordable now.
Following expenses are considered while financing a car:
|Car Ex-showroom Cost||Registration cost||Insurance||Mandatory Accessories|
The rate of interest on car loans varies from bank to bank. But now they are being offered between a range of 7.50% to 10.50% depending upon your FI (financing institution) & your credit score, sometimes. FIs also levy processing charges on the car loan which ranges from 0.5% to 2%. Extent of finance may depend upon the customer’s profile like- job, credit score, bank statement & car model. Tenor of a car loan is a maximum of 84 months. However, some banks may allow only up to 60 months as per their lending policy.
Let’s say you have purchased a car with a loan of Rs 1.00 Lakh. Following table will give you some more information on the interest cost:
|Loan Amount||RoI||Period||EMI||Total Interest||Total Amount|
TABLE SHOWING INTEREST COMPARISON OF CAR LOAN FOR DIFFERENT REPAYMENT TENOR
From the above table, we understand that if we pay Rs. 880/- extra Per lakh & reduce tenor to 4 Yrs., we save around Rs 15970/- per lakh which means, we will save an amount of Rs 95820/- on a car loan of Rs 6.00 Lakh. Hence, you may consider it as a part of the financial plan to workout calculation like this with the help of an EMI Calculator and save big.
Generally, following documents are required for a car loan:
- Identity Proof
- Address Proof
- Income Proof viz- ITR for 2 years or 6 Month Salary Slip.
- Any other document as per bank policy.
MY TWO SUGGESTIONS:
- ALWAYS PURCHASE A CAR THAT YOU CAN AFFORD TO PAY OFF IN 4 YEARS.
- CHECK BANK’S TERMS & CONDITIONS OF SANCTION LIKE – PROCESSING FEE, ROI, REPAYMENT TENOR ETC.
For further assistance, you may also write to us and we will be happy to help.
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