So, you got your first big appraisal and the moment has finally arrived to fulfill your big dream i.e. owning your dream car. Well, you had enough of traveling in the bus and standing in the long queues of the ticket counters and now it’s time to change this old and overworked routine.
However, instead of spending a huge chunk of the amount on one purchase, you can opt for taking a car loan. One of the benefits of opting for a car loan is that you can make payments via EMIs. You can easily calculate emi for car loan online. But, with various banks and dealers, claiming to offer you the best rates only end up making the situation more perplexed for you.
Being short to the medium term loan and there is prevention against putting a major dent in the savings, most of the car customers go for a car loan. This is even true in case you have a significant amount of disposable income. You must have come across situations where the dealers have provided you information in such a manner that it has made more difficult to make a decision. In addition, you might be having incomplete information about the car loans.
So, let us discuss five common misconceptions you might be having about the car loans –
1. Opting for 0% interest loan –
Most of the car dealers, nowadays, offer 0% interest financing, but an interest-free loan always comes with its own issues. Often, the interest-free loans have a minimum tenure of three years which is not enough to provide you with financial flexibility. There are chances that in order to bring down the loan amount, the down payment might be increased. If your dealer is offering 0% car loan, you have to ensure he is not increasing other charges just to compensate.
2. Need to buy a new car to get car loan –
If it is more profitable, for the dealer, to sell out the new car then he will leave no stone un turned to sell it. But, the old cars which are not in use for more than two years may also do as a new one while costing a lot less. At the moment, various financial entities and banks such as HDFC & SBI have started giving loans for the used cars as well. One thing you need to consider is that the car’s date of manufacturing should be within the pre-determined parameters.
3. Getting 100% financing for your car –
You must have come across dealers boasting of 100% financing, this means that the loan will be covering the total cost of the car. Well, this is not what usually happens, if it is then you will be charged a much higher interest rate. Be informed that you can have a car loan for up to 90% of the invoice value of the car. Some financial entities, banks, or lenders will even offer a maximum of 85% financing also, but this will entirely depend on your past relationship with them and your credit score will also pay an imperative role here.
4. Applying a car loan is imperative through a car dealer or the loan can be rejected on the basis of your poor credit score –
Make sure you are aware of the fact that your dealer has nothing to do with what impact your credit score will have. While it is true that your poor credit score can make you pay more interest rate, requests for car finance loans gets hardly declined as it is a secured loan where your car acts as a collateral. The creditor will consider additional elements such as – your income level and employment history prior to finalizing the terms and conditions which usually comprise of the term and interest rate of the loan.
5. Applying through the car dealer to have lower interest rates –
This is not true at all. When you are applying for car loan through car dealer, this will mean that you will be negotiating with your car seller and not with the financial provider. This is not the right approach to go ahead, as it is doubtful that the dealer will make extra efforts trying to get the best deal. In order to have the best deals, you need to compare different car loan options available out there.
DIRECT LINKS FOR CAR LOAN / AUTO LOANS FOR DIFFERENT BANKS
|S.No.||Name of the Bank|
|4||Bank of Baroda|
|5||Bank of India|
|6||Bank of Maharashtra|
|8||Catholic Syrian Bank|
|9||Central Bank of India|
|12||City Union Bank|
|19||Indian Overseas Bank|
|20||Indus Ind Bank|
|23||Karur Vysya Bank|
|25||Lakshmi Vilas Bank|
|26||Punjab National Bank|
|27||Punjab and Sind Bank|
|28||South Indian Bank|
|29||State Bank of Hyderabad|
|30||State Bank of Mysore|
|31||State bank of Bikaner and Jaipur|
|32||State Bank of India|
|33||State Bank of Patiala|
|34||State Bank of Travancore|
|36||The Ratnakar Bank|
|38||United Bank of India|
|39||Union Bank of India|
6. Only one individual can have a car loan –
One of the common misconceptions is that only one individual can have a car loan. But, this is not true as a car loan can be in the name of two people as well. But, it is only possible as long as you are meeting the terms and conditions put forward by the lender.
You don’t have to be surprised about these myths as these are quite common with any financial product or it can also be with an important life decision, therefore without any doubt, there are so many with the car loan in India as well. But, when you debunk these myths and become familiar with the actual truth, then only you are in a position of making a smart decision for a car loan.