Settle your Car Debt early with Loan Foreclosure

With the growth of economy and evolution of banking system, purchasing power of individuals seems to have increased significantly. Apart from preferring an improved lifestyle, people are now found pursuing comfort and leisure. Even for a small journey across the city, they now prefer private vehicles over public transport. This approach has substantially increased the demand of cars in the country.

The versatile credit system in the Indian economy allows many banking and non-banking bodies to provide easy loans to borrowers. Taking advantage of this opportunity, many car aspirants have now fulfilled the dream of owning a car. With easy installments and quick documentation processing, borrowing a car loan has become simple.

Yet many people don't like their vehicles lying under the burden of loan installments for a long time. For them, financial bodies like Magma are providing special loan-foreclosure or prepayment facility on car loans. The following sections will talk about foreclosure, its benefits and its charges.

What is Foreclosure or Prepayment?

Foreclosure means paying off the entire loan before time, without following the installment schedule. Whenever a loan is foreclosed, the borrower does not have to pay the extra interest, which would otherwise be retracted through the installments.

Benefits of this facility

Car loans are usually secured by keeping the vehicle as collateral. On pre-paying the loan, you get full ownership of the car, and can readily sell it or transfer it to someone, without having to consult the bank. Moreover, you need not have to worry about fluctuating car loan interest rates that are generally linked with floating-rate loans.

Procedure and Charges

For initiating the pre-payment process, the borrower needs to approach the bank personally. Many banks and NBFCs like Magma do not allow foreclosure for 6 months from the date of availing a car loan. After the 6 months span, 5% of the total outstanding amount is to be paid as pre-payment penalty. Nevertheless, this penalty is comparatively lower than the impending interest, which you would otherwise pay on installments.

So, avoid keeping your ride as collateral, go ahead and release it with loan pre-payment.

Applying for Business Loans in India

Loans are extremely popular financing methods which are used for various purposes. It could be to purchase a car, a home, personal reasons, educational purposes, for gold, against insurance policies, against bank fixed deposits, from PPF or EPF, against shares or mutual funds or even for marriage purposes. So, what if you are a young, budding entrepreneur and want to start up a business?

Well, there's good news for you! There are financing options for that as well. Known as 'business loans’, these financing options are similar to other types, only the intent is different. They are taken for the purpose of starting up a new business venture or even to purchase an already existing business or also bring in funds to an existing business to finance its current and future business activity.

It is easy to read about these business loans in India online by visiting the bank or financial institute’s website. One can also get instant online approval as well. There is no need for any guarantor for this process.  All a person has to do is fill in their personal details online such as their first, middle and last name, residence city, mobile number, PAN card number, date of birth and email ID.

After they fill in all the necessary details in the online application form, the bank will verify the data. Banks will pay attention to all the possible factors, even one’s credit score before approving the same. They would also require a business plan, which will demonstrate one’s ability to repay the amount.  

After submitting all the required information there are also certain essential financial documents that are required, besides merely providing information. Banks also want to see hard copies of your PAN card, identity proof, address proof, bank statement of the past 6 months, voters ID card, driving licence, projection of future operations and any other if required. Only after all of the above has been approved will the bank issue the same.

One of the most important and common of these is the SME loan. They are taken for small and medium sized enterprises. These financing options are known to form a major chunk of the general business finance market. They can be taken for many different purposes; working capital requirement, new purchases, expansions, vendor and dealer financing, bill discounting, etc.

Researching about these products and making oneself aware about the features offered for the same is very important. One should also compare the procedure from different banks as well. Only after comparing different banks should one make a decision where they want to obtain their loan.