Car loans come to your rescue when you think of buying a new car but do not have enough cash to do so. This is the vital factor which drives maximum buyers towards applying for car finance in India. Now, just as there are a great variety of cars available in the market to match different budgets and requirements, you also get different types of finance options too. Different companies offer different flexible finance options for the buyers to decide whichever suits their needs the best.
For this it is necessary for the buyer to consider the pros and cons of each option before taking the final decision. Given below are the different types of car finance options that can be considered before buying the vehicle.
Auto financing is type of car finance where you can borrow the entire amount required for buying the car or make a deposit against the loan. Under such a scheme some specifics also equip you with the facility of borrowing up to four to six times of your income.
Pre-owned car loans from the second category of car financing available in India. For this particular type of loan, the amount to be borrowed is lesser than other financing options. It also imposes certain restrictions on the vehicles to be bought like the age of the car, which should be between two to four years. At the same time, this type of loan also allows you to borrow the entire amount required provided that you are ready to take the risk.
The third type of car financing comes with a clause, which specifies that the loan security will be the purchased vehicle itself. More specifically, the car may be claimed by the lender in case the borrower fails to pay back the loan amount.
Car finance available in India may also be classified on the basis of their methods of repayment of the loan.
According to ourbusinessblogs.com & ourtravelsblog.com, when it comes to repayment of car loans the most popular option availed by Indians is the regular EMI. This option keeps the car financing interest rates constant and does not allow fluctuations, which in turn assures the buyer of stability. Two other popular options for car loan repayment are the Step-up EMI process and Step-down EMI process.
In the case of the former, the initial stages of repayment require the buyer to pay lower interest rates which rise gradually as years get added. In the latter process, the interest rates are highest in the beginning which decreases with time. Another option for repayment of a car loan comes in the form of Balloon EMI, which requires 20 percent of the lump sum amount to be paid initially, to diminish the burden on the borrower in the beginning. This is done in exchange of higher interest rates.