Loan Against Car

Factors to Check Before Availing a Loan Against Car

Financing your four-wheeler purchase is easier than ever now with a loan against car providing necessary financing with ease. These customised loans come with favourable features that allow an aspiring car owner to purchase the vehicle of his/her liking. While car purchase otherwise involves lump-sum financing from personal funds at a go. A car loan allows deferring such expenditure to a good number of months for enhanced affordability. It thus also enables you to maintain your financial cushion by negating the need to utilise lifelong savings for car purchase.

Not to mention, the terms of the loan are favourable for the borrower too and enable easy loan management. Nevertheless, you may best be prepared before applying for your car loan to get the best of available offers. Let’s check out some crucial factors that ease loan accessibility and management for borrowing aspirants.

Tenure of the Loan

Repayment tenure for a loan against car can be crucial to its overall affordability and ease of management. It is because it helps determine the EMIs payable, thus allowing the borrower to strike the right balance between immediate and long-term affordability of the loan. Borrowing from reputed financial institutions in the market. You can avail tenures of up to 5 years for easy and affordable loan repayment.

Importance of Credit Score

Even though the general notion indicates at credit score as the subservient to primary eligibility factors, the ground realities suggest otherwise. Despite not making it to the list of eligibility requirements for car loans. Credit score plays a crucial role in financing approval for the borrower as it is indicative of his/her overall credit worthiness and the risk involved for the lender. The ideal  score for availing a car loan should still thus be 700 or above.

Rate of Interest Applicable

Before finalising your car loan offer, you must check the rate stacks that lenders offer on these advances. Compare financial institutions based on these levies and keep a lookout for the type of interest calculation before finalising. Whether purchasing a new car or a second hand car on EMI, interest rate can be  crucial game changer for your overall loan affordability.

Additional Fees and Charges

Along with the interest rate, other fees and charges levied also contribute to determining the overall affordability of a loan against car. Make sure to check and compare the compulsory additional fees. Some of which might be mutable based on the lender selected. Also, fees on additional facilities like prepayment and balance transfer must also be considered.

Flexibility in Repayment Options

The available repayment options and their flexibility also contribute to convenient loan management. For instance, alongside EMI-based repayments, you may be able to choose flexi repayments. Prepayments and refinancing based on your selected lender.

Requirement for Down Payment

The loan against car mechanism requires you to pay a certain percentage of the vehicle’s cost as down payment. It primarily depends on the LTV or Loan to Value ratio offered by the lender. Which is a percentage representation of the total financing available out of the cost of your car.

In the current financial market, down payment can go up to 20% of the car’s market price. Which can be beneficial for your financial health if you can afford to make such a hefty upfront payment. Otherwise, the option to look out for car loans with high LTV exists too. With reputed lenders today, eligible candidates can secure an LTV or up to 95% for car loans.

The time involved in approval of your loan against car further determines. How early you can secure financing when in need. Again, your choice of lender determines how early you can secure approval. With some loan options from eligible applicants receiving approval within a few minutes of application. Keep all these factors in mind to finally determine the loan offer to apply for. And secure your vehicle financing by meeting the eligibility requirements.

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