Car Loan Benefits

Owning a car these days have become more of a necessity than a luxury. Lenders in India understand that which is why they offer car loans that are affordable, quick, and requires minimal paperwork. Gone are the days when getting a car loan would require you to approach a bank or a financial institution physically and stand in a queue to submit your application, along with a whole lot of documents. These days getting a car loan has become easier and can be done online at the comfort of your home. There are many other benefits that a car loan offer and we shall discuss it in detail in the below sections.

Isn’t it Better to Buy a Car in Cash Instead?

Buying a car in cash will require you to shell out a large sum of money. Instead, you can invest the money in some financial instruments such as fixed deposits (FDs), mutual funds, etc., and earn interest on them. Or you could simply put aside the savings for a rainy day. You never know when an emergency may strike you.

Benefits of Taking a Car Loan

Taking a car loan to buy a car comes with an array of benefits some of which have been explained below:

• Can be repaid in easy EMIs – The repayment of your car loan can be made in easy equated monthly instalments (EMIs) which you can decide yourself but will be based on the repayment tenure you choose, and the interest rate charged by the lender. EMIs reduce your burden of having to pay a large sum at once towards the loan repayment. Instead, you can repay in smaller amounts, according to your affordability.
• No need for providing collateral – When you avail a car loan, you do not have to provide any collateral as the vehicle itself will be considered as one. The car will be hypothecated to the bank and in case of any default in payments, the lender will have the authority to seize the vehicle, auction it, and recover the outstanding loan amount. There is no need for you to provide any additional security/collateral for a car loan.
• Great for building your credit history – If you take a car loan and make timely payments, it will lead to an enhancement of your credit score. Having a good credit score will assure lenders of your good repayment capability and this may translate to them offering you lower interest rates or other benefits such as waiver in processing fees, etc.
• Improved budgeting - When you repay your car loan through EMIs, you can plan your finances better as you will know how much amount you will be paying each month towards the loan. You can then adjust your other expenses accordingly. To calculate the amount of EMI, you can use the EMI Calculator tool available on the BankBazaar website.
• Offers additional benefits – These days many lenders offer you bonuses such as free servicing, free road tax, etc., on car loans. Though these additional perks may not be the best reason to take a car loan, it definitely won’t hurt!