One of the best options if you want to purchase your dream car is a four-wheeler loan. With online loan application and approval becoming extremely simple, it is possible for anyone to apply for this loan online on the lender’s website and then get the loan approved and get the funds to purchase his dream car.
The application procedure for car loan is extremely simple and most lender websites have a form or a call back request that a potential borrower can fill in to opt for a car loan. Many lenders offer this type of loan which has kept loan rates competitive and procedures simple.
However, before you apply for one, there are a few things that you must consider. These may impact your loan decision or will help you make a better loan application.
- Secured loan:
A four-wheeler loan is secured. The vehicle gets hypothecated to the bank till the loan is repaid. This means that the name of the lender appears as the car owner in the registration documents and on insurance papers. It also means if there is any default in meeting loan obligations, then the lender can repossess the car and dispose it to recover loan instalments.
- Loan tenure:
The standard repayment tenure of a car loan ranges from three to seven years depending on the lender. Most lenders give you the flexibility to decide the loan tenure. If you have a good repayment ability, you can negotiate with the lender to get the loan tenure of your choice. While setting your loan tenure, remember that longer loan tenures increase the interest pay-out and reduce the monthly EMI.
- Loan to Value:
Lenders do not finance the entire cost of the vehicle. Lenders typically cover between 60 to 80 per cent of the on-road price of the car. However, lately, some banks are offering zero down payment car loan where they finance 100 per cent of the on-road price of the car. However, you need to have good track record and credit score to get zero down payment.
- Credit score:
Your credit score is an indication of your repayment capability, your repayment history, loan applications, loan rejections and approvals, composition of debt, etc. When you make a loan application, the lender makes a hard pull request for your credit information which can help them decide whether to accept your loan application or not. You can manually check your credit score to ensure that correct information has been captured by the credit score.
- Loan due diligence:
Due diligence means finding out information about different lenders, their loan offerings, the rate of interest, other fees and charges, loan application procedure, etc. This due diligence can help you narrow down the few lenders you want to make loan applications to. It also gives you proper information which can help you compare between lenders.
- ArjitChalmela's blog
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