It’s everyone’s dream to own a lovely house and a car. A house is a necessity; it takes priority over the car. But, in today’s world, owning a car comes with multiple benefits. Due to increasing traffic, traveling in a car is a safer option. During a pandemic, the car helps cut off unnecessary contact with people. Still, buying a car is not a piece of cake. It can come with many financial challenges. A car loan helps you achieve your dream of maintaining financial stability.
Introduction to car loan
A car loan is a way to buy a car without paying all the costs in a single installment. One needs to pay the required down payment for the car. The remaining amount from the price of the car is paid in monthly installments. Many lenders and companies offer you a car loan. Different companies have different rates of interest on the loan. It is the extra amount one needs to pay in return for an extended period.
The procedure for taking a loan:
The procedure for applying for a car loan is very simple. One meets with the financer and discusses the details of the loan. One can compare the interest, processing fees, and other charges from different lenders to find suitable ones. After submitting the necessary documents, the down payment and EMI amount are fixed.
A few of the necessary documents while applying for a car loan are as follows:
- Aadhaar card
- Pan card
- Driving license
- Residential proof
- Income statements
Benefits of a car loan
- Cost efficiency: With the option of EMI, there is less pressure on a buyer to buy a car. One gets to pay the cost of a car in comfortable installments. It helps to maintain financial stability. One can get financial assistance up to 70-80 percent.
- Tenure: A car loan tenure ranges from 1-7 years. One can choose the tenure comfortable to them. With passing years, there is a chance of increasing salary, which helps to pay the installments quickly.
- Pre-repayment option: It’s possible to repay the loan before the end of the tenure with only a few charges. It saves one extra money on interest.
- The vehicle is the collateral: During the tenure, the vehicle itself serves as collateral. Nothing else is required unless the income of the person is significantly less.