4 Types OF EMI Options for Car Loans

Nowadays, you can easily drive in a car, if you have a stable source of income and a dream to own a ride. Your dream of owning a car can be easily made true by availing one of the numerous car loan options provided by banks and other financing bodies.

Despite of borrowing a loan, the most prominent concern, which will float all the time in your mind, is repayment of loan. Repayment of loan is a major concern among car buyers because any delay in the EMI can cost them their car. So, many people are known to scrutinize the loan documents carefully before applying for car loans.

Before you apply for any of the available car loans, take a look at these 4 types of EMIs, which will make the loan repayment process easy for you.

1.       Regular EMI

This is the most common type of EMI option available with majority of the car loans in India. It is available with loans that are having a fixed rate of interest. For the whole loan tenure, the EMI imposed is fixed, and covers up the principal amount and interest efficiently.

2.       Step-Up EMI

This is a special arrangement in which the amount of EMI increases as you progress through the loan tenure. The amount is lowest in the first year, and increases gradually with time. 

3.       Step-Down EMI

This option is the reverse of Step-Up EMI. In this, the EMI amount decreases with time. However, the interest rate levied on such loans is comparatively higher than the normal loans.

4.       Balloon EMI

This is a where special case wherein the borrower is allowed to pay up to 20% of the principal amount at the end of the loan’s tenure. The rate of interest charged is much higher than the rest, but this method helps to reduce the initial burden of repayment on the borrower.

These 4 types of EMI options are easily available for car loans in India.