A lot of research goes into getting a brand-new car. We fix a budget and look for different models, fuel and body types, accessories, safety features, engines and transmissions, comfort, colour and resale value. But it is as important to explore the financing tools. The best would be to apply for car loan online. The Indian car loan market is expected to grow at a CAGR of more than 8% in value terms and reach $60 billion by FY2026. Around 80% of cars in India are financed and about 100% of commercial vehicles are taken on loans.
Steps to Finance the Purchase of a Car Wisely
These figures show that it is a viable option to opt for a loan. Work with banks that help keep your finances intact by offering:
- loan tenures up to 10 years
- 100% on-road funding
- no foreclosure fees
- hassle-free application process
But before diving into the loan, take a step back and know the process well. It will help you make informed choices and avoid errors. Below is a detailed guide on how to finance the car purchase and drive your dream vehicle home.
Review Your Credit Score
Getting the desired automobile loans, favourable car loan interest rate in India and convenient terms and conditions largely depend on your credit profile. Anything above 750 and above is ideal to lower the risks of loan rejection. Most banks will not approve your loan request with a poor credit score since the borrower does not come across as creditworthy. So, if your score is below average (under 600), try to pay EMIs on time, check credit reports for inaccuracies and keep the credit utilisation ratio between 30-40%. All of these will increase the chances of loan disbursal without complications.
Arrange the Papers
Log in to the bank’s website and check the required documents. A trusted bank will need you to provide KYC, Proforma invoice, bank statement and others in case you have opted for a specific program. Make sure each one is updated and the information is accurate and true to your knowledge. Incomplete and wrong details may lead to loan rejection and re-application which is time-consuming. Else, the loan can be processed within the least possible time.
Approach Your Bank
It is a good idea to work with the bank where you have savings and current accounts. Long-term relationships can qualify you for pre-approved instant car loans. But you can compare and pick the one with minimal fees, simplest documentation and easy eligibility criteria. See if a relationship or branch manager can arrange for doorstep loan assistance as well which is safe amid a pandemic. Calculate the payable EMIs by adjusting the variable sliders like amount, interest rate and period. Arrive at an affordable instalment and start applying for low-interest car loans right away.
Read the terms and conditions before confirming the loan request. Compare with the current car loan interest rate in India and make sure you are not paying a humongous amount. Submit all the documents and abide by the guidelines. Now all that is left is getting the loan disbursed to start the car purchase venture.