What do you mean by a Car Loan?
Why is a loan availed?
At times of necessity, one has to arrange funds on short notice. Despite liquidating the properties, financial arrangements may be made based on the protection of the assets. Similarly, a car owner could be able to obtain swift funds against the protection of the vehicle. Loans can be obtained quickly and at a lower interest rate as compared to a personal loan.
Some Features of Car Loan
- Salaried people and Self-employed Individuals can avail of this loan.
- 0.40% of the loan amount is charged as a Processing fee.
- No Foreclosure charges
- A penal interest of 2% per month is charged
- A Credit Score of 750 or above is requested.
- PNB car loan provides round-the-clock assistance for its customers throughout the year.
- Several Loan Schemes are provided for availing a Car Loan.
- No guarantor is required.
- A loan can’t be availed for a commercial vehicle.
- EMI Calculator can be used for the estimation of loan repayment.
Documentation
Bank account details, copies of income tax returns for the past 2-3 years, and a copy of a bank statement, KYC documentation such as identity and address proof, along with two photographs, must be sent with the application form. Document verification is an important step in loan approval. A copy of the Vehicle Insurance, Driving license, and relevant details about the vehicle are also asked.
The LTV ratio of a car loan is the ratio of the price of the car financed by the lender. The balance is the amount of the advance paid by the borrower from their own resources. LTV prices for car loans can differ depending on the lender. Car loan applicants should accept LTV ratios when comparing different loan deals based on their risk exposure and credit score. Create bigger down payments to reduce the interest costs while Loan deals and interest rates are lower. However, you should never jeopardize your long-term investments or your emergency fund to make a larger down payment.
Prepayment Charges
If you prepay the car loan in whole or in part throughout the payment period, there's a possibility you can lower your total interest cost. However, on fixed-rate car loans, prepayment fees can be as high as 5-6% of the principal amount. The lenders can limit the number and amount of prepayments allowed over the course of the loan. Therefore, applicants who are planning or being able to prepay their auto loans in the future should prefer a lender with minimal or no prepayment fees and restrictions.
Check Your EMI Affordability
Most lenders prefer that the total EMI obligation be less than 50% of the monthly income of loan applicants. Additionally, Car loan applicants should consider their monthly contribution to their chief financial goals, insurance premiums, rents, and other inevitable lifestyle costs when deciding on an EMI. After meeting these parameters, those who have enough surpluses should opt for a shorter repayment period to lower their overall interest cost. An EMI is a specially curated option where the indicated amount can be chosen as per your you.
The processing fee can vary.
While the car loan processing fee can be up to 2% of the loan amount, many lenders reduce or waive their car loan processing fee during the holiday or festive season. When comparing lenders, keep in mind that a high-quality loan, such as a car loan, will cost a considerable sum of money. Increasing your payments or interest rates to compensate for the loss or waiver of your processing fees won’t be applicable.
To conclude, a Car Loan can fulfill your dream of owning a car, and with the help of a car loan EMI calculator, you can get an estimate about your EMI over a chosen tenure period with applicable interest rates. A basic document verification along with vehicle-related documents are requested for verification. Using the bank’s mobile app, you can keep track of your loan application process.