Terms And Conditions Of A Car Loan.

If you have visited this blog, you are most likely thinking of purchasing a car. You can apply for a car loan through a simple, fast and paperless process by visiting the bank website. When you visit the site, you will come across terms such as EMI, rate of interest and the car loan EMI calculator, which will help you in calculating the EMI of the car loan.

The conditions or procedures of getting this credit facility differ in each bank. Let me inform you of the primary process. The first step is choosing and finalizing the make and model of the car you want to purchase, next you check if you are eligible for the car loan by visiting the bank website. Then, comes deciding the amount of this advance that you want, it will depend on the loan tenure, how much you can pay now, and the interest rate. This can be done by using the EMI calculator that is available for free on bank websites. Once you decide on these three things are the make and model of the car, Your eligibility for the loan by checking the EMI calculator, and also checking your CIBIL score (which can be viewed on the bank websites) If you are not eligible there are some banks/financial institutions in the market that will help you out (you can call and email us for more information by checking our website)

The car loan EMI consists of the amount payable, processing fee, and the interest charged, the EMI of the loan depends on the tenure of the advance, the longer the tenure, the lower is the EMI; the shorter the tenure, the higher is the EMI. Apart from the car loan, rate of interest, and processing fee, some lenders might also apply a premium to the rate at which you are borrowing. You can apply for a car loan by submitting your Age, Income, and Identity proof. The time is taken to approve the loan changes from bank to bank. Once approved the amount will be transferred to your account and you may book your car!

There are various banks and lending institutions that provide you with a car loan. One of them is the HDFC bank, and they offer features like: 

1. Custom-fit car loan:  

• It has flexible repayment. 
• Zero foreclosure charges*.
• Top-up loan after nine months - Pre-existing car loan customers can get a top-up with no documentation.

2. Zip drive: This is a feature applicable only for HDFC car loan customers in which the car loan amount is sent directly to the car dealers through net banking.

Conclusion: The above information will help you prepare before going in to avail yourself for a car loan, as said earlier make sure you are eligible, i.e. your credit score should be at least 750, All of your previous loans EMI’s if any should be paid on time, you should have the above documents on hand. And if you have any other queries, we at Dialabank are always here to help you.  

Also read:- Compound Interest Waiver In A Car Loan

Who Can Apply For A Car Loan

 

One of the main factors that Banks and lending institutions take into consideration while determining an application for a car loan is the credit score of the particular person which should at least be 700,  this will maximize their chances of availing the car loan. Other than this the borrower should have a continuous source of income at least for the past two years, The borrower should not have defaulted on any of their payments which will decrease their credit score and greatly reduce their chances of availing a car loan.

There is a facility on various bank websites, including HDFC bank, which is known as a car loan EMI calculator. This calculator considers the principal amount, rate of interest, and loan tenure of the car loan and gives you the monthly payment, which you will have to pay to the lender, which in this case is HDFC bank.

The eligibility for a car loan varies in each bank, HDFC follows the below procedure:-

Salaried Individuals:-

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• Borrowers should be working in an organization for a minimum of one year with a work - experience of a minimum of two years.

• Borrowers should have a telephone or postpaid mobile connection.

• Minimum earnings should be three lakh, including the income of the co-applicant.

• Latest salary slip and form-16 required.

Self Employed Individuals and Professionals (Sole Proprietorship):-

• The business’s tenure should be a minimum of 2 years, and the company should be up and running for at least the past two years.

• The minimum earnings of the borrower should be Rs. 3 lakh.

Self Employed Individuals and Professionals (Partnership Firms):-

• Those who can be considered self-employed individuals or professionals are those who are partners in the field of service, trading, or manufacturing.

• The minimum turnover of the company should be Rs.3 Lakh per annum.

The others who are eligible are self-employed individuals of public and private companies with a minimum earning of Rs.3 lakh per annum.

Part-payment charges:-

Part-payment is granted subject to fulfillment of 12 months (i.e., Post payment of 12 EMIs).

Part-payment will be approved twice during the car loan tenure. Part-payment is allowed only once a year. Part-payment will not increase the past 25% of Principal Outstanding.

5% on the part payment amount in case of part prepayment will be within 13-24 months from the first EMI (Equated Monthly Instalment). 3% on the part payment amount in case of part prepayment will be after the 24 months of the first EMI (Equated Monthly Instalment). The rack rate of interest or rate of interest that HDFC bank offers on car loans is 8.80% - 10%. The minimum age of a borrower should be 21 years.   Conclusion:- If you fall within the criteria mentioned above, you are eligible for a car loan without any hassle or troublesome procedure. Must Read-Common Terms of Car Loans That One Must Know

How does car loan tenure impact the EMIs

As the Indian middle-class family moves towards a more modern lifestyle, it has increased the demand for four-wheeler vehicles proportionally increasing the demand for car loans. The option of getting a car loan is convenient and advised for people with low monetary resources or those who do not want to invest such a large amount at once. 

EMI or equated monthly installment, at the basic level, refers to the fixed amount that you would be entitled to repay monthly to the car loan provider until the car loan matures. EMI is a part of every loan, in this case, the car loan is computed by the principal amount and a rate of interest. In this scenario, a car loan EMI calculator is the most important element in car loan repayment.

Since it is EMI that a borrower would be liable to pay, for a short to medium term depending on the choice of tenure. A lower EMI gives lucrative schemes to a borrower. But at the same time, a higher EMI for a shorter tenure might be more sensible.

EMIs are impacted by the following perks:-

• The amount of loan that you are seeking is the main parameter due to which the car loan EMI value fluctuates drastically. The more the principal, the higher the EMI.

• The term chosen for the car loan is another major factor that can impact the monthly car loan value of the EMI. longer tenure will result in reduced EMIs but one should note with longer tenure the interest amount to be repaid increases. Thus it is suggested to choose a balanced scheme according to one’s requirements. 

• As the EMIs are calculated at the rate of interest, this factor must be understood thoroughly. Different banks offer distinct interest rates. As the rate of interest increases, the EMI payable also increases. 

• Foreclosure or prepayment charges also bring significant changes to the EMIs. 

Following are the advantages of the car loan EMI calculator:-

• It gives you an opportunity to calculate the EMI amount which will be payable after the disbursal of the money. 

• It also provides you with a comprehensive view of the loan repayment. 

• The monthly and annual amortization tables can be viewed.

Conclusion:-

The loan tenure thus impacts the EMIs from a large perspective and one should be always aware of the fact that there are many more factors affecting the EMI.

 

Also read this: Benefits Of A Car Loan