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How to Choose a Bank for a Car Loan?

3 Min Read
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Author - Pawni Mishra
How to Choose a Bank for a Car Loan?

Owning a car has become a necessity because it is convenient to travel using your vehicle from one corner to another. However, everyone can't buy a car with savings. To solve that problem, many banks and NBFCs offer car loans at the best interest rate.

A car loan can be availed easily because of its easy eligibility criteria and minimal documentation. It is a hassle-free process but to select the best lender, you need to keep the following pointers in mind:-

1. Plan a Budget: When you decide to avail of a car loan, you must have zeroed down the car you want to buy and must have estimated the budget. Make sure that along with the car's budget, you also get the running costs of the car for a year. Next, check the interest rate offered by various lenders. Car loan interest rate ranges between 8.50%- 15.00%. There are chances that you might get a lower rate with a bank with whom you already have an account.

You must also check how much loan to value (LTV) the lender offers on an auto loan. Some lenders offer 100% LTV also on the ex-showroom price of the car.

2. Compare lenders: Many lenders are available in the country to offer car loans, but everyone has something different in their product. When you decide on the lender, you must check the funding options like on-road price or ex-showroom price. You can also select if you wish to have a floating interest rate or a fixed interest rate.

Also, you must check the various schemes offered by banks, especially for salaried employees, government employees etc. These schemes offer lower interest rates.

3. Know the charges: When you apply for a car loan, you should not only check the interest rates, but you must also check for other fees like processing fees, prepayment charges, bounce charges, credit report charges etc. A comparison of such charges is also important because this way you can save money. Sometimes your interest rate may be lower, but these charges might be high, making your loan more expensive.

4. Ask about prepayment : There are chances that you get an annual bonus. With that money, you can choose to close your car loan before the end of your tenure. But many financial institutions charge a fee for pre-closure, which is called prepayment charges. Remember that few banks do not levy these charges after two years of loan sanctioning, and some do not charge at all.

5. Get insurance on loan : When you take a car loan, it is important that you also try to avail of insurance on your car loan. This will protect you and your family in case of unforeseen incidents. The insurance company will repay all that money.

6. Wait for the best offers: Some banks and NBFCs offer attractive schemes during the festive season. They lower down the interest rate and waive off various other charges. So, if you are planning to buy a car around the festive season, you must check such offers.

So, if you are planning to buy a car and get finance from a bank or your friend or family is planning to do so, these points can help them get a loan from the best bank and at a lower rate. To get more assistance, you can visit MyLoanCare.in.

Happy Driving!

About Author

Pawni Mishra
Writing was her hobby and few years later she made it her profession, so to enjoy work. She has been in this field for 3.5 years now and loving every bit of this content world. Currentlly, she is writing on financial topics and is loving every bits of it.

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Pankaj Kumar 2021-08-26

Nice Article...

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