Everything You Need To Know About Car Loans - Car Loan Guide - Tata Capital


Why Buying a Used Car is a Smart Decision?

Aug 18, 2017

The Basic Guide to New and Used Car Loans

Aug 02, 2017

In this face-paced world, owning a car has become a necessity. Using public transportation becomes quite stressful and time-consuming. A car is your personal mode of travel and offers a high degree of convenience and safety.

Purchasing a car, whether new or pre-owned, is a huge decision. There are numerous factors to be taken into consideration such as brand, model, and most importantly - finance. Spending all of your savings to buy a car is not a feasible option. You may opt for a car loan, and finance your car purchase easily.

About car loans

There are numerous financial institutions offering loans to those seeking to buy a car. The borrowed amount has to be repaid over a period of time through regular installments known as Equated Monthly Installments (EMIs). Once the principal borrowed amount and the interest have been paid, the contract is then terminated.

Features of car loan

While borrowing finance, be it new or used car loans, it is important to consider the following features.

  1. Interest rate
    The rate of interest is the most important aspect of a loan. It is the amount paid to the lender for servicing the loan. Higher the interest rate, greater will be the amount to be repaid. Therefore, choose a lender offering the most competitive interest rate as it will help you save a significant amount of money.
  2. Loan tenure
    This is the period during which the loan has to be repaid. Higher loan tenure indicates that you may repay your loan over a longer period of time. Subsequently, the amount you pay towards your EMIS for your new or used car loan will be lesser.
  3. Repayment plans
    In order to provide customers with the best terms, some lenders offer customized repayment plans. You, therefore, have a choice to increase or decrease the EMI amount based on your cash inflow and outflow. This flexible structure allows you to manage your finances easily.
  4. Fees and charges
    Besides the rate of interest, there is a range of additional fees that you need to consider. These include processing fee, documentation charges, pre-payment penalty, foreclosure fees, and part payment charges, besides others.

Eligibility and documentation

In order to avail of car loans, it is necessary to be eligible for it. While the eligibility criteria may vary from lender to lender, the basic criterion includes a minimum age and salary as specified by the lender. In order to support your application, you may submit the necessary documents required. Upon verification of these documents, the application is sent for processing, and the amount is then disbursed to your account.

The automobile market in India is growing at a rapid pace. Acknowledging this demand for vehicles, lenders are providing finance at attractive terms. You may take advantage of such loans and buy your dream car without any hassles.

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New Car vs Second Hand Car What's the Better Choice?

Aug 02, 2017

Purchasing a vehicle is a huge financial decision. While buying a car, you may have to decide amongst opting for a new or a second-hand car. Both new and used cars have their own advantages and disadvantages. New cars have latest technologies, safety features and may be customized. However, the cost associated with new cars is high, along with other charges like insurance and registration cost. Pre-owned vehicles, on the other hand, are pocket-friendly, but chances are that they might not be in the best shape.

Take the following four aspects into consideration while deciding on a new or used car.

1. Your budget

You may opt for either a brand new or a pre-owned car based on your budget. New cars are expensive as compared to a used vehicle. If your savings exceeds the cost of the car, you may opt for a car loan. Your savings may be utilized to make the down payment, while the rest may be borrowed from a financial institution. While seeking funds for your car purchase, whether new or used, you may compare car loans from various lenders and select the one offering the best terms.

2. Depreciation hit

An important question to ask yourself while opting for a new car is whether you are ready to take the depreciation hit? New cars depreciate quickly in the first few years. A wiser decision would be to opt for a pre-owned car instead. A used car depreciates at a lesser rate. You may borrow a used car loan to fund your pre-owned car purchase. Several banks and non-banking financial companies (NBFCs) offer a high principal loan amount along with competitive interest rates. Besides, the flexible repayment plans and lower fees and charges will be an added advantage. Used car loans, therefore, help you own your dream car without much financial difficulty.

3. Maintenance

Reliability is an important factor to consider while buying a car. New cars are more reliable as they have not been driven before. Hence, the chances of a breakdown are lesser as compared to new cars. Subsequently, the cost of maintenance on repairs and servicing reduces. Used cars, on the other hand, have a greater risk of being damaged. Though the car may have been repaired by the previous owner, chances are that it may need repairs again.

4. Latest technologies

New cars come equipped with the latest technologies, such as multimedia and navigation interfaces. Besides, they are also saddled with safety features such as airbags, Electronic Stability Control (ESC), backup cameras, and Anti-lock Braking System (ABS), besides others. Pre-owned cars may not have such latest features.

While taking a decision to buy a new or a used car, you may take the aforementioned factors into consideration. Weigh the pros and the cons, and opt for the one that has greater benefits.

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