Top Up Loans and Car Loans are two different forms of institutional credit that are available in the economy leveraging credit facilities and bringing about financial independence in the market structure thereby strengthening the banking institutions in the country. Their application in the market brings about financial autonomy and autocracy.
Top Up Loans and Car Loans are two different forms of loans which are extremely critical behind the infrastructural growth of the country thereby bringing about improvement in the credit structure of the country. Top Up Loans der to those loans which can be availed additionally to the personal loans which are availed from the banking institutions in the country. The top-up loans can be referred to as the additional or extra loans that can be charged over and above the existing personal loan.
On the other hand, car loans are one type of personal loans which can be availed from the private commercial banking organizations in the country. Through the use of car loans, we can borrow money from the banks and use this monetary amount to purchase a four-wheeler and pay off the instalment amount of the car to the bank along with the interest amount.
However, according to the monetary portfolio experts in the country and the financial market analysts in the country comment on the fact that top-up loans are much better than car loans. Following are a few reasons they justify as the perfect proposition for the growth of the credit sector and how top-up loans have inherent advantages over car loan-
Lower interest rates than car loans- Top-up loans have lower interest rates than car loans as the car loan interest rate ranges from the value of 10%-11% of the car loan as interest amount. Top up loans, on the other hand, are 0.5% to 1% less or lower than the interest rate of the car loan interest rate.
Moreover, the lower amount of interest rate for top-up loans determine the strength of the top-up loans and justify the reason why it is considered to be one of the most lucrative options for interested borrowers and why they sway towards engaging themselves with this form of the loan. Lower interest rates attract a large base of the customer and enhance the lending capacity of the borrower.
Payment of low and affordable EMI's- One of the basic advantages of top-up loans over car loans is that the monthly instalments payable for top-up loans is much less and affordable than car loans. The EMI payment is determined according to the payable capacity of the borrower.
For example- India Bulls Car Loan facility offers a high EMI facility to the borrower. In a sense, the payment of a high proportion of money as EMI is advantageous since it reduces the loan burden within a short period. On the other hand, top-up loans are also an important form of loan since they offer low EMI Payments. The people availing for top-up loans do not have the income capacity to pay a huge amount of money as EMI. Thus low EMI amounts facilitate the payment of EMI to the bank thereby enhancing the payment capability of the interested borrower.
No need of keeping anything as collateral security- At times for availing car loans, collateral securities and security deposits are to be maintained with the private commercial banking institutions in the country. Collateral securities refer to the process of pledging assets to the bank. On the other hand for top-up loans, no collateral securities need not be kept to the banks and thus top-up loans can be availed only with the submission of relevant documents.
Easy Processing of Loans- In case of top-up loans, the processing of loans is much easier since the documentation required to be submitted for obtaining ratification of the loan is much convenient and easier. In the case of processing of car loans, the process is much more complicated with intricate details required.
A Good Option for Used Car Buyers- Top-Up Loans are a perfect option for used car buyers. Second-hand cars can be brought through the implication and use of top-up loan facilities.
CONCLUSION
Thus it is required that top-up loans assume more quantum of importance than car loans thereby improving the existing credit infrastructure and credit institutions in the country.
Also Read:- Common mistakes while availing of a Car Loan
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