How to select the right Car Loan for yourself

Car loans are loans in which banks provide financial assistance to the person who wants to purchase the car they have always wanted.

Car loans are available at an affordable rate of interests, making it very easy to finance a car.

Some of the critical features of a car loan that makes it suitable for a borrower are:

• Car loans are completely secured against the car. In case of any default in the EMI payment, the vehicle can be sold in the market to recover the loss by the bank.
  

• Prompt and timely repayment of the loan and interest amount increases the credit score substantially, which provides massive advantages for the person seeking a loan in the future. A credit score is a score that is given to assess the creditworthiness of an individual.
  

• Car loans are available at a meagre interest rate which can go to as low as 8.50% as offered by some banks such as Bank of India, which provides their Bank of India Car Loan.
  

• The car loan process has been made very easy so that less trouble has to be faced by the customers in applying for a car loan.
  

• Car loans are provided by many banks and financial institutions. The customers are made available with many options to choose from.

The following eligibility criteria are needed to be fulfilled for a person to avail of a car loan:

• The age of the applicant availing for such a car loan has to be 18 years above and less than 65 years.
  

• The applicant must have completed one year of employment with the same employer. This is done to ensure stability in the customer’s job.
  

• The applicant applying for a car loan has to be a salaried working individual or self-employed for at least three years. This means they must have experience of at least three years in their respective domain.
  

• The applicant must have minimum monthly earnings of 20,000 or above to avail of a car loan.

Various car loan documents required to be submitted are:

• Identity proof:

1. Driving License

2. PAN Card or Aadhar Card

3. Voter ID

4. Valid Passport

• Residence Proof:

1. Electricity Bill or Water Bill or Telephone Bill copy

2. Copy of valid passport or Aadhar Card or Driving License

• Income Proofs:

1. Salary slips for the last three months

2. Form 16 or Income Tax Returns copy over the previous two years

3. Previous six months Bank account statement

4. Submit Balance sheet, P&L Account, if self-employed

Various tips which can help you to choose the best car loan for you are:

• Know your budget: Setting aside your budget is essential to avail of a car loan that demands a regular payment of EMI every month.
  

• Compare: There is a considerable amount of options available in the market to avail of a car loan. The borrower has to compare and select the best one possible for them.
  

• Know the Interest rates: Knowing the charges and interest rates is very necessary. Regular EMI is to be paid each month, and thus, learning about them is very necessary.
  

• Understand the Credit score: Knowing the credit score is very necessary before availing of a car loan. Better the credit score, the better are the chances that you will get the car loan at lower interest rates. With the help of a car loan, an individual can improve their credit score for getting future loans in a better way.
  

• Choose the loan with a suitable tenure: Choosing a loan with a favorable tenure affects the repayment of the loan and helps improve the credit score indirectly. When you make prompt payments, it will be beneficial in the long run.

Conclusion

Car loans are very readily available in the market, and it provides significant financial assistance to a person who wants to purchase the car of their dreams. Car loans are available at a very affordable rate of interest too.