Car loan

car loanLooking for Best Car Loans?? If it's what you are searching for, then you are at the right spot!! Because at ERUM, getting a car loan is a lot simpler. We, give you access to various leading and prominent banks in the country. To avail our services, all you need to do is just fill the online-form (will take just a few minutes). After you submit your details, we let the banks (with whom we have partnered), evaluate your details in order to provide you with an appropriate deal.

If you just go to a showroom and pick out a car and do the financing, you could get the car, but in all probability would also end up paying some thousands of rupees more than you should have. Today the Internet has revolutionized the way we buy cars. So it is important to educate yourself before-hand, about how to get the best deal when you buy a car.

Buying a car, now, has become easier than ordering a home-delivered pizza. Banks today provide easy finance schemes where you can drive away with a car. But deciding on the right car finance is very challenging. You may be confused on which one is beneficial for you and might end up with one that has various "invisible" strings attached to it.

Car-Financing Options

The first thing you need to know, before availing for car loan, is the type of car you want and see if it suits your estimated budget. Narrow your choice of cars, to two or three. Compare rates of all banks and get their best rates. Also ask for recommended dealers for the car(s) of your choice to see which dealer is giving you the best deal. You apply for a loan and you buy a car. You go to a bank and fill out some forms and they disburse your check. Sounds simple enough, doesn't it?

How much loan can I get?

The amount of the loan depends upon:
  • The cost of the vehicle.
  • The type (standard/premium).
  • The percentage financing offered.

car financingIf you are buying a new car, you can get up to 90% financing but some banks have a limit beyond which they do not offer loans. Also different banks have different terms for different models (standard/premium, new/old) The percentage of finance the banks give on cars is also determined on the basis of second-hand market value of that particular car. This is for cases, if default by any chance, the banks can get a higher resale value for the car. This makes the banks comfy enough to give higher percentage finance.

What documents do I need to establish proof of income?

For income proof, most banks look at your IT returns for the last two years and also at the nature of income. However some banks do not consider speculative income - from the stock market, rental or agricultural income. Some banks discount such income by up to 50% in their workings.

Documents Required

Salaried Self Employed
  • Application form with photograph.
  • Identity Proof.
  • Residence proof.
  • Latest salary slip.
  • Form 16 / ITR.
  • Bank Statements.
  • Application form with photograph.
  • Identity Proof.
  • Signature Proof.
  • Address Proofs as per Bank norms.
  • Last 2 years income tax returns.
  • Last 6months bank statement.

However, your application could be denied or cancelled, or you may get an offer at a high interest rate if you have bad-credit history. All banks go through your financial history when you apply for a loan. Different banks have different standards of judging a credit history. So it is wise to clear up all old debts, if you have any, before youApply for Car Loan. This will help you get your loan approved at lower interest rates.

You repay the loan in equated monthly installments (EMIs), comprising of principal amount and the Interest Rate. The EMI depends upon the loan amount, the interest rate and the tenure of the loan. Also don't just evaluate the deal based on monthly EMIs. Calculate how much you will be paying over the tenure of the loan at EMI Calculator. This in turn is a function of Interest rates.

The interest rate depends on the Flat Rate and Reducing Balance method. In the Flat Rate of interest, the principal amount (on which interest calculations are made) remains same for the entire tenure of the loan. The total interest is divided over the number of installments to derive the EMI.

Reducing Balance, means reducing the paid-up principal amount (on which interest calculations are made) from the outstanding loan amount. The interest you pay is calculated on outstanding principal balance.

Car loans typically don't require a guarantor but if your income does not meet the credit criteria, then you will be required to have a guarantor for your loan. Guarantor can be your spouse, if employed, or a third party guarantee will do.

Processing fees is a one-time charge taken for processing and legal paperwork. At the beginning of the period, the bank requires you to pay 2-4 percent of the loan amount as processing fees. For example, if you take Rs.5 lac at 15% for 5 years (60 EMIS) and charges you 2 percent as processing fees, you are in effect paying an amount of Rs.10,000.

If you chose to pay up your entire money before the tenure, a Pre-payment penalty is charged. So know about such penalties before-hand to avoid future misunderstanding between you and the bank. Also keep in mind that most banks offer you the option of pre-payment, but they do not give the flexibility of part-payment. You "have-to" insure your car. It is against the law to drive an uninsured car. You must get an insurance policy for a year's duration, after which you have to renew it. The amount of insurance is equal to the market value of the vehicle and not the book value of the vehicle.

The premium is added to the EMI paid for the loan tenure and you are insured for the amount you have taken, incase something unexpected happens Assured amount will be given to the bank without burdening the members of the family. So keep these few things in mind while financing your next car !You have reached the best spot to get the best loan, for your car, from the best banks. Go, fill the application form now!

How to choose which is the best Bank in above to get Car loan

These are the points of comparision
  • Interest rate charged by Banks
  • Processing fee charged by Banks.
  • Prepayment Charges in case you can afford to pay earlier.

So if you multiply the emi per month that you get from Bank and add the processing fee and deduct the loan amount , you will get to know how much extra you are paying for the loan and which is the cheapest for you.

Are the Car loan rates different for different people? Yes Banks do give preferences to certain set of customers for lower rates and fees.

The factors are :
  • Its gives lower rates who have the salary accounts with the same Bank.
  • It gives lower rates to employees of top 5000 companies in India.
  • Based on your income per month you might get some waivers or on the total loan amount you may get cheaper rates.
How does Cibil and Credit Bureau effect my application?

Yes, your car loan application can be rejected if your credit score is not good. Here are few things that you should know. A cibil or credit score of above 750 will get you approval from all Banks. From 650 -750 there will be certain Nbfc who may be able to give you loan. If you haven't taken any credit card or loan your cibil score is 0 and there will be less Banks to give you loan at that time and best is to approach the bank where you have account. If you have applied and have got rejected your cibil score and it's your first loan then your score is -1 and most Banks will not give you loan.

Special offers on Cars

On time to time basis Banks have tie ups with car manufactures and they give discounts via lower rates.

The recent such offers are

  • 0 % Foreclosure charges on new car loans post completion of 24 months on Maruti Hyundai Toyota and Honda Cars.
  • Special Schemes on Renault Duster, Mahindra XUV 500.
  • Discount Schemes on Hyundai Cars up to Rs.150000 (*View More)
For EG: If you take a car loan of 4 lakhs for 4 years and at rate of 10.00%.

Your EMI will be Rs.10,145 and by paying for 4 years you will give an extra of Rs.86,961 as interest. So if you are okay to pay that extra amount, go for the car loan. To check how much you are paying extra, check interest rates and calculate EMI through Our calculator.

The other function is that how much Bank is ready to give you- How much car loan can I get ?

Banks to give car loan see your income and ability to pay and also see what is the total value of the car. So banks give 80-85% value of the car but also check whether you have income and enough surpluses to pay the EMI every month. To figure out your ability to pay car loan - Banks check what your income is and what the other Emi you are paying are. They deduct the Emi and on the rest disposable income can give you 50-60% equal to you income.

For E.g

Income – 30000 per month Existing Emi - 8000 , So Net income=22000 , so your emi can go upto 60% of 22000 which is then divided by emi per lac and hence your loan amount is identified. Now when you know how much you want to pay extra for Car loan and how much an average you can get, it is important to pick the best Bank.

Important announcement are goes here