Few points to take note of before applying for Car Loan

Planning

oi-Roshni

By Roshni Agarwal

Published: Thursday, November 21, 2013, 11:34 [IST]

Opting for a car loan scheme is a general trend to get your dream car. Banks finance only some percentage of the ex-showroom price and the remaining has to be paid as down payment by the purchaser of the car. Loan offers on car differ in respect of the car for which the finance is being taken i.e. used or new car. For different car types, banks offers differential rate of interest. Also, car loan is provided either at fixed or floating rates for varying tenures.

- Nearly all banking entities for processing your car loan application, require you to furnish identity and address proof, proof of income either by way of salary slip or income tax returns of last two to three years.

- Further depending on your liquidity you can decide the term for the repayment term which can be anyway in the range of 3-15 years. Also, you can choose either the floating rate of interest or fixed rate.

- The extent to which the lending institution will disburse the loan amount for your chosen car would largely depend on the income profile or employment of the borrower along with criterion such as the selected model and price of the car among others. So, in order to be sure of your capacity to purchase a car of your choice through bank finance, you can confirm about the quantum of loan banks can disburse furnishing the requisite information to the authorities concerned.

- After approval from the financial institution with respect to loan sanction for your car purchase and processing of car loan application in due time, banks generally disburse the loan amount in 1-2 days after you have furnished the required documents.

- Though the car remains hypothecated with the bank until the full loan-repayment, car loan borrowers can retain the original copy of registration certificate (RC), invoice as well as insurance policy of the vehicle. However, photocopy of the above mentioned documents has to be provided to the bank in due time as specified.

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