An automobile is a precious commodity; owning one gives us immense joy and a sense of responsibility. Having your own car also helps with easy commutes in the city and intercity travel. But the prices of automobiles are skyrocketing every passing year. Thanks to the lending system, which helps people easily fulfil their dreams and get their dream car or bike. Several factors would affect your auto loan; it is advised to check cibil score regularly for easy loan approval.
What is an Auto Loan?
An auto loan is a form of financial support offered to buy an automobile with little or no upfront cash spending. The lender’s loan can be returned over a certain time in equal monthly payments with an agreed-upon interest rate.
Car loans are typically secured by the actual vehicle that is being purchased. It serves as a kind of assurance for the auto loan. If the loan amount is not paid back in the time frame given, the lender may seize and sell the automobile to cover the debt.
Check cibil score for a high credit score which might make you eligible for a reduced interest rate, ultimately saving you money. The primary loan amount and the monthly payment amount are both influenced by your credit score.
Features of an Auto Loan
Some of the distinct features of an auto loan are as follows:
- The tenure of the loan can range from 1 year to 7 years.
- The financing might range from 85% to 90% of the automobile’s on-road pricing. Under specific conditions, certain financial institutions may finance up to 100% of the vehicle’s on-road price.
- Customers may additionally get personalised auto loans according to their specific requirements. Equipment, insurance, and attachments are usually included as a component in the loan amount given.
- An applicant can apply and get a loan amount that is three times higher than their annual income.
- People can get auto loans for both new and used vehicles.
- Applicants may also prepay the loan’s balance when they’ve earned enough funds to finish the transaction. The conditions may vary based on the financial institution. Prepayment fees for auto loans might apply and vary depending on the loan provider.
- The documentation process for an auto loan is easy, and the approval period is tight and quick.
- Certain automobile dealerships have tie-ups with financial institutions which could get you additional discounts.
- The collateral against the auto loan is the car bought with the borrowed money.
- The repayment of the auto loan amount is done in monthly instalments for the given tenure.
Ways to Get the Best Auto Loan Rates
Getting an auto loan is easy, but getting the best auto loan might require a bit of research and time. Here are certain factors and methods you can use to get the best auto loan at great interest rates and features.
Check Cibil Score
Your credit history plays a very important role in every important financial decision. Ensure you regularly check your credit score on the cibil score app to maintain a good score for lower interest rates when applying for an auto loan. While various financial institutions have varying baseline credit score requirements, generally speaking, you need a credit score of at least 600 to be qualified for an auto loan and a minimum score of 700 to get the best options. The total amount that the borrower is required to repay the financial institution depends significantly on the interest rate.
Explore the Market
It is always advised to research well before investing in any financial product, especially when applying for an auto loan. An auto loan is a good amount you would borrow from any financial institution, so ensure you have thoroughly reviewed the options available before settling for a loan. Consider the factors like interest rate, tenure, loan amount, additional costs and check cibil score requirements. Financial institutions are attracted to your application and might offer good interest rates if you have a good credit score and credit history.
Pre-Qualify for Auto Loans
When you’ve limited your list of potential financial institutions to a handful, it’s time to seek interest-rate quotations to compare deals. You may be pre-qualified for a loan before submitting an application to a lender. Pre-qualification gives you an idea of the interest rate and the loan amount you are likely to be eligible for based on the little details the financial institution has regarding your credit history. This stage lets you learn about the rates and conditions you may expect in considering your credit history.
Make a Down Payment
When buying an automobile, try to deposit a larger amount of money. This would reduce your loan balance and improve your credit score. A good down payment benefits you in getting good interest rates and other conditions from financial institutions. This will also help to reduce the tenure of your loan and the monthly payments.
Getting an automobile with our earnings is a dream of every individual. Auto loans are a saviour for many families who wish to have a car or two-wheeler. Loans can be complicated, but getting an auto loan is easier if you understand their terms and conditions. If you check cibil score regularly and maintain a good score, it is very easy to get a good auto loan.