Car Loan features you should know

Owning your own vehicle offers numerous benefits, from enhanced mobility to reduced reliance on public transportation. However, the upfront cost of purchasing a car can be substantial. In such situations, a Car Loan proves invaluable. It lets you fulfil your desire for a vehicle while alleviating the immediate financial burden. Here are key features of Car Finance worth noting:

No collateral requirements

While availing of a Car Loan, you need not present any additional collateral. This is simply because your vehicle serves as a security with the bank. If you fail to repay the Loan, the bank can seize and sell it off to recover the Loan amount.

Flexible payment modes

You can select any of the offered payment modes to repay your Car Loan. For example, you can pay via the auto-debit facility, where equated monthly instalments get debited from your Bank Account every month automatically. Or you can pay through post-dated cheques, which are cheques drawn with a future date. You can even check the EMI amount beforehand on a Car Loan EMI calculator.

Prepayment facility

Sometimes, you might find yourself in a position to settle your entire Loan amount ahead of schedule. This option is known as the pre-payment facility. It grants you the ability to repay your loan before its designated term concludes. However, it is essential to review your lender's terms and conditions before utilising this feature.

Some lenders may impose restrictions, permitting pre-closure only after a specific duration. Also, be aware that there may be charges associated with prepaying your Car Loan. It is wise to clarify this with your lender beforehand.

Quick Loan processing

Car finance is provided against the car you intend to buy. Hence, you enjoy simpler Car Loan eligibility criteria and minimal documentation. This further enables lenders to process the Loan faster.

Tenure options

You get the flexibility to choose from tenures (up to 7 years) to repay your Loan. This gives you ample time to arrange funds to repay the borrowed amount.

Lower interest rates

Car Loans usually have lower interest rates than other financing alternatives. This is because it is a secured Loan.

Discounts

If your lender is in a tie-up with a specific car dealership, you may get offered a discount if you purchase the vehicle from that dealership. You must check this with your lender beforehand to avoid getting your hopes up.

Opportunity to increase eligibility

Some banks let you combine your spouse’s income to enhance your Car Finance eligibility. You can even get a higher Loan amount by doing so. Ensure you provide the necessary documents to prove this.

Conclusion

A Car Loan serves as a valuable financial tool, bridging the gap between aspiration and reality in car ownership. Yet, understanding its intricacies is paramount. With this knowledge, you can make proper decisions and maximise the benefits of your Loan.