Benefits of Paying Off your Car Loan Early

It is a good idea to pay-off your debt on car loan beforehand, so that it does not pile on, along with future expenditures. Prepayment of your car loan brings you manifold benefits.

Some of the benefits of availing car loan pre-payment option include:

Escape paying the rate of interest of future EMI's

A large sum of your monthly income, which will be paid as EMIs towards the car loan, can be saved if you prepay the loan. This free money can be invested in more lucrative investment arenas that are available in the market. It also reduces the burden of the total interest to be paid back on the loan otherwise. Once you are rid of the debt of the loan, the additional amount you are required to pay as interest amount on the loan will cease to prevail.

Prepayment adds to your credit score

Paying off your loans helps you to clean your portfolio of debts and increases your credit score. Timely or pre-payment of loans adds to your credibility and reflects your ability to deal with liabilities. Your credit score can help you to secure another loan in the future, if the need arises. A positive credit score boosts your reputation and signals financial stability.

Save the car’s insurance coverage amount

Lenders require you to have a certain level of insurance cover on the car that has a lien on it. You can save a good amount of money on your car insurance cover by prepaying the loan, especially if the car is older or in poor condition. Once you pay off the car loan, you have the flexibility and liberty to change your car insurance coverage according to your needs and financial convenience.

All You Need to Know About Car Financing

Owing a car, especially in today’s day and age, has become more of a necessity. In a country like India especially, buying one is the second most expensive purchase that most of us would make, second only to our home. In all probability, the price of the car you’re considering will be a tad out of your budget, and realizing this there are a lot of financial establishments who come up with car financing options to enable to you to buy the car. These days you could apply for car finance online and even if you choose to go the traditional offline way, you would only need basic documents like proof of id, address, income, etc.

So what is Car financing? Simply put, it is a form of secured loan where you provide your car as collateral. As far as the actual loan amount is concerned, it is calculated based on factors such as current value of the car, the type of car, value of the car is the second hand market, deprecation rate of the car, etc. Most financial establishments will however, offer up to 100% of the on-road cost or at least 90% of the ex-showroom cost.

Moving on to repayment tenure; car financing companies normally set the repayment tenure between 1 to 5 years. As far as EMIs are concerned; the lower the repayment tenure the higher the EMIs tend to be and vice versa. Now, what if you default on default on a payment? Most establishments will let you to default up to two payments. Any more than that and they can have the right to seize your car. Loan defaults have a direct impact on your credit rating, which then makes it extremely tough for you to apply for a loan in future.

Moving to interest rates; you can choose between a fixed and variable one. Also, considering how popular car financing is, financial establishments have extremely competitive interest rates. You can also negotiate the interest rate and try to bring it down. Typically, if you are a devoted patron of a particular financial establishment, they will lower their interest rates for you.

Now that you have a better understanding about car financing, it is wise to go ahead do through research to see for yourself what car finance option best suits your needs.

How to Arrange Loan for Used Cars

Many of us prefer to invest in a second hand or used car once you get a driving license. It is always an advisable step to take. It is any time better to hone your driving skills with a used car rather than going for a new car.

The best part, now you can even avail of a loan for used cars. There are more and more of banks and non-banking institutions that are readily providing with loans for the same reason. We list down some of the things to consider applying for a used car loan.

Age of the car speaks a lot about it

When it comes to new cars, you can easily avail the necessary finance. However, the same cannot be said about a used car. There are a lot of parameters that are taken into consideration when zeroing upon whether to grant you a loan or not.

One such factor in used cars that plays a vital role is the age of the car. It is determined by certain factors such as the condition of the car, the number of kilometers it has been driven for, and the model of the car. Based on it the car determines the percentage of loan to be provided.

It comes with a higher rate of interest

The rate of interest levied from you depends on two factors. One is the condition of the car and second is your relation with the bank or the NBFC personnel. Based on both these factors you can avail up-to 70% of the value of the car as loan.

Get through an organised dealer

The number of people selling their cars and buying new ones has soared of late. Therefore, there is no dearth of getting hold of used cars. However, it is advisable to get through an organised dealer to make your car purchase. As the cars aren't made available to you after a good screening but also comes with financing facilities.

So get all the above mentioned things checked and avail of the loans for used car easily.

Tips to cut down on your Car Loan Interest Rate

Investing in a car is the second largest investment any individual ever makes in his or her life after a house. Many of us always finance our car dreams through a car loan. However, amid-st the excitement of getting a new car we really don't try to look into the intricacies of different finances associated with it.

Do you know with few calculations and alterations you can cut down on the premium you pay for the car insurance and also the rate of interest liable on the loan you have borrowed. We list down few tips to take into consideration on how to reduce your car loan rate of interest.

Keep your credit score in check

It is very important to know your credit score. It is one of the first thing lenders take a look at when lending you money. Also, accordingly define the rate of interest over your car loan. Therefore, higher your credit score, lower will be your rate of interest.

If you feel just paying off your debt is all enough to keep your credit score good, then wait and have a keen look. It is also important to pay your debts on time. For instance, a delay of even 30 days is taken into consideration.

Shop around

Do not stick to just one bank or non-banking institution to provide you with your car loan. It is very important to shop around and look for options provided by few in the market. Look for the rate of interest applied by few institutions based on your credit score and accordingly take your call.

Bargain with your existing loan holder

It is always advisable to go with your existing loan provider. However, if you are getting a car loan at a lower rate of interest, then bargain with your loan provider and discuss the offers you are getting from other banks and non-banking institutions.

Finally, choose the institution that provides you the lowest rate of interest and a convenient mode of payment.

How Used Car Loans Work?

Buying a brand new car can prove to be costly deal. So, many people consider buying a pre-owned or used car. Prices of pre-owned cars are quite lower than their out-of-factory counterparts. Furthermore, used car is the best option to hone and sharpen your driving skills.

The prices of pre-owned cars vary according to their age, type, make and model. You may either pay for the car in cash or use a financing option like pre-owned car loan.

Borrowing a pre-owned car loan can be difficult and substantial amount of time and resources are spent to sanction it. Here is a clear-cut overview of how car loans work and what financiers consider before sanctioning a used car loan.

      1.      Age of the car plays a crucial role

The age of the car plays a crucial role in the loan sanctioning process. If the car is more than 15 years old, than borrowing options get ruled out. Similarly age of the car also decides the tenure of loan. For instance, if your prospect car is 2 years old, then you can easily get a loan for tenure of 5 years.

      

      2.      Model of the Car is a deciding factor

Principal amounts of pre-owned car loans vary according to the model and make of the car, along with its age. If the car model is still available in the market, then you will get a loan easily. However, if it has phased out, then financing becomes difficult.

     

      3.      Buying a car from established dealer aids the loan process

Established car dealers have organized process to take care of cars documentation. Proper documentation speeds up the loan sanctioning process.

     

      4.      Valuation of the car decides the nuances of the loan

On applying for a pre-owned car loan, banks and NBFCs like Magma send valuation experts to examine the car. Valuation is done on the basis of car model, manufacturing year, number of kilometers run, claims history, and the whereabouts of the car. Valuation and credit profile of the borrower determines the interest rate, loan value, and repayment options for used car loan.

Once valuation and loan estimation is complete, you have to submit important documents to the financier. Document processing and loan sanctioning takes around 8 to 10 working days.

Commercial Vehicle Loans: Essential Financial Options for these Vehicles

Being one-third the size of the United States, India is known to be the second most populous nation in the world; after the People's Republic of China. Comprising of twenty-eight states and seven union territories, India is also one of the emerging economies in the world. However, a large segment of the population belongs to the middle class and many; sadly live below the poverty line. Public transport is thus extremely important in this country for all strata's of the society, i.e. the importance of commercial vehicles in the country is extremely vital for the economy of the nation.

So, what are commercial vehicles or in other words which automobiles can actually be included in this segment? Every mode of public transport; be it bus, taxicabs, vans, light or heavy commercial vehicles, semi-truck, box trucks, vans, coaches and trains are all included in this segment. Besides this, various vehicles that are used for farming purposes such as plough, tractor’s and harvesters are also included in this segment.

India is known for being the world's largest three-wheeler, third-largest light commercial vehicles, second-largest two-wheeler and heavy commercial vehicles. So, financing these vehicles is of utmost importance in the country. There are a large number of leading finance companies (Banks and Non-Banking Financial Companies -NBFCs) in India where one can get commercial vehicle loans for an entire variety of these vehicles.

Most of these financiers have a Pan-India presence and offer their services online for people to read about the financing option, eligibility and even avail online for the same. Some of the providers include banks such as HDFC Bank, ICICI Bank, State Bank of India, Citibank Kotak Mahindra Prime Limited (KMPL), etc. There are also many public sector banks offering these financing options such as Union Bank of India, Dena Bank and Indian bank. Some of the popular NBFCs include Magma Fincorp, Mahindra Finance etc.

These may include finance for auto rickshaws, three wheelers, multi utility vehicles, pick-up trucks, light, medium and heavy commercial vehicles, container trucks, buses which include both passenger and school buses, and trailers.

One of the most important factors that need to be paid attention to when availing these loans is the interest rates that are charged. In today’s time and age, where these financial options can easily be applied for online, there are competitive rates in the loan segment for commercial vehicles. Magma car loans are offered at interest rates that range from 12% to 16%; depending on a variety of factors. Many banks offer interest rates that range from 10 % to 20% (depending on the type of car it is – new or used).