What is a new car loan?
A new car loan is basically applying for a car loan facility to purchase a new model car. You can get a lot of benefits by applying for a new car loan. A lot of individuals in India prefer to get a new car instead of a used one because you can use the new car for a number of years. The interest rate on this loan facility is very low. It usually ranges between 7% to 15%, which is comparatively less. The interest rate incurred can be both - fixed and floating.
A number of banks provide the facility of a car loan at 0% down payment. Here, you don't have to make any prepayment to get your loan amount disbursed. However, it's advisable to make a small amount of down payment. Because it can help you to reduce the burden of repayment, and it will also help you to build trust between the lender and the borrower.
Banks give customers the flexibility to choose a repayment structure and tenure according to their income and budget. So they can calculate their expenses beforehand to check their repayment capacity and requirements. You can use some online tools like Car Loan Calculator SBI.
Advantages of applying for a new car loan facility -
Can purchase a new car:
This loan facility allows the borrowers to get funds to purchase a new car. So if you want to purchase a new car, but you don't have sufficient funds, then you can easily apply for this loan facility and get funds for it.
Low-interest rate:
The interest rate on a new car loan is comparatively less. It varies between 7% to 16%. However, this differs from one bank to another. You can negotiate your interest rate with the bank if you have a good/decent credit score.
Secured Loan:
A new car loan is a secured loan. But this doesn't mean that you have to provide any collateral to get funds from this Loan. Your newly purchased car will act as collateral, but it will still be in the borrower's possession. Banks will only seize the car if the borrower can't repay the borrowed amount.
Flexibility:
Customers get the flexibility to choose a car of their choice. So if you have a long dream of purchasing a Mercedes, then you can do it. You will even get funds for purchasing the car from a car loan.
Used Car Loan -
It is an ideal option to get funds if you can't afford a new car. You can easily apply for a Second Hand Car Loan facility to purchase a second-hand car.
Customers have to repay the amount they've borrowed along with the interest rate and within the loan tenure. Missing even a single instalment can affect your credit score. This will leave an impact on your credit report for at least six years.
And in case the borrower can't repay the loan amount, then the bank has every right to seize the car and sell it at an auction to recover the loan amount. So it's essential to plan your repayment tenure and structure before making any decision.
Advantages of used car loan facility -
Can avail a luxury car in a cheaper way:
You can use this loan facility to purchase a used luxury car. And if you're purchasing a used car, then you will get it at a cheaper rate.
No down payment facility:
A number of lenders offer new car loan facilities for zero down payment. So they cover 100 per cent of the cars on road rate. Borrowers don't have to make any down payment to get funds disbursed. However, it is advisable to make a small amount of down payment to reduce the burden of repayment.
Banks will finance 90% of your car amount:
Banks and lenders will finance up to 90% of your used car amount. So if the used car is INR 2,00,000, then banks will finance up to INR 1,80,000.
Hassle-free application:
The entire application process is quick, easy and hassle-free.
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