Before purchasing a car, a buyer should do an in – depth research on the car model he or she wishes to purchase. Apart from this, the buyer should choose the best way to finance the car. Instead of borrowing money from a relative, what buyers can do is take a car loan from a reputed bank. This will prevent them from being dependant on another person for money and also avoid other issues. The bank loan that they take will be their own liability and they can repay the money over a period of time.
One should not hurry up and apply for any car loan they find online. There are many banks in India that provide car loans at very good rates of interest. People should research and compare the various car loan schemes offered by the different banks and then apply for the best one among them.
While comparing the different car loan schemes, people should focus on the interest rate. It is one of the most important factors as it alone can make their loan expensive or cheap. This rate is not the same for all banks and it differs based on the loan tenure chosen by the customers. For example – If you take a car loan from ICICI Bank for purchasing a new car for up to 23 months, the interest rate charged by the bank for this tenure is 12.75 percent per annum. If you take the loan for a period ranging from 1 year to 35 months, the bank will charge you an interest rate of 12.25 percent per annum and if the tenure of your car loan is between 3 years and 7 years, ICICI bank will charge you an interest rate of 10.75 percent per annum. The interest rate charged by ICICI Bank on used car loans is 15.5 percent per annum. The rate of interest is not always fixed and can be changed by the bank and they have to inform their car loan borrowers whenever they change the interest rates.
The CIBIL score of a borrower also has an impact on the interest rate. Banks prefer to charge a lower interest from people who have a high credit or CIBIL score as such people are considered to be reliable and financially responsible.
It is advisable for people who plan to apply for a car loan to understand how the car loan interest rate is calculated because this knowledge will help them a lot while comparing the different loan offers. There are some loans that are calculated on the basis of reducing balance while there are others that are calculated on the flat rate basis. So, if the borrowers are comparing two different loan schemes, they have to make sure that the interest rate of both the loans are calculated using the same method.
Once you apply for a car loan which provides you the best rates of interest, all you have to do is purchase the car and remember to pay your installments on time.
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