Car loans: Everything you need to know

Are you thinking of buying a car? Are you worried about the price of your dream car? Put these worries to rest because you can avail a car loan and get yourself the car of your dreams.

With the rise in consumerist culture, most lenders have quickly adapted to provide specialised consumer finance, which includes car loans. Lenders give out car loans either to an individual or through companies which adjust the EMIs through the borrower’s salary, thus making it even easier to buy the car of your choice.

What are car loans?

1. Secured loan:
Car finance is secured, i.e. the car is hypothecated to the lender until they repay. In case the EMI for the car loan is not paid, the lender can seize the vehicle and sell it to recover dues. However, this is only in extreme cases.

2. The rate of interest:
Car loans can have either a fixed rate of interest or a floating rate of interest. The type of interest and the price depends on the lender and also the borrower's loan application. The rate of interest may be higher for borrowers who already have existing debt or for pre-owned cars.

3. Documents required:
A car loan requires fairly standard documents:

• Identity proof (PAN card/Aadhar card/Passport/Voter ID/Driving license)
• Address proof (Aadhar card/Passport/Voter ID/ Driving License/Telephone bill/Electricity bill/Gas bill/Life insurance policy)
• Income proof
o ITR for the previous 3 years,
o Form 16/Salary slips
o Balance Sheet/Profit and Loss account as applicable
• Bank statement for the last 6 months
•

4. Eligibility criteria:
Most lenders put up the car loan eligibility criteria on their websites for prospective customers to see. It is best to check out the eligibility criteria before applying for a car loan. Some of the standard criteria are:

• Minimum and maximum age of the applicant
• Minimum years of employment with the employer
• Minimum income including that of spouse or co-applicant

Some lenders may specify some other criteria, but by and large, these are the standard eligibility criteria.

5. Charges:
The interest on a car loan is not the only charge that a borrower will have to pay on the car loan. Some of the other costs are:

• Foreclosure charges
• Part-payment charges
• Overdue EMI charges
• Loan processing fees
• EMI payment mode swapping charges
• Cheque return charges
• Amortisation schedule charges
• Legal, repossession and incidental charges

While selecting the car loan, it is best to find out the lender who provides the loan with the lowest amount of charges.

6. Types of car loans:
Usually, there are three types of car finance available:

• Car loan for a new car
• Car loan for a pre-owned vehicle
• Loan against car

Each loan has different terms and conditions and interest rates.

What are the advantages of taking a personal loan?

A requirement for funds may arise at any point. In case you need to raise funds through a loan, it is best to get a loan that gets quickly approved and disbursed and doesn’t come with too many conditions. A personal loan is perfect for that.

A personal loan is a favourite type of unsecured loan. These loans are quick and easy to avail and provide a source of fund infusion especially in case of medical emergencies, where the fund requirement is urgent. People prefer personal loans because of their flexibility and ease of application.

Benefits of a personal loan:

1. Online personal loans:
With the digital revolution, it is very easy to get personal loans online. Several lenders have a completely online application procedure. You only need to fill the form, upload the documents and the lender will process your loan application and get in touch with you. Many lenders have a loan interest form online where approved loan applicants are contacted for further procedures. It has now become very easy to get funds in a matter of a few clicks.

2. Unsecured loans:
A personal loan is an unsecured loan. The borrower does not need to put up any collateral to avail this loan. This makes it possible for any borrower to avail it. The final loan disbursement depends on the borrower’s eligibility, but not having security makes this type of loan accessible to a lot of borrowers.

3. Negotiable rate and tenure:
Depending on the borrower's financial position, it is possible to negotiate the price and mandate for a personal loan. If you hold a strong credit score and repayment capacity, you can get favourable repayment terms, and even waive off charges such as loan processing charges.

4. No conditions attached:
One of the crucial benefits of a personal loan is that there are no conditions attached to the use of funds. It can be used for any purpose for example, for wedding expenses, for travel, for medical emergencies, for home improvements etc. The lender does not place any conditions on the use of funds which gives a lot of freedom to the borrower.

5. Instant approvals and fund disbursements:
It is possible to get an instant personal loan online in a matter of minutes. Many lenders have speedy loan approval processes which are completely online. This makes it easy to apply and get a personal loan.

6. Minimum documentation requirements:
A personal loan requires very few documents. It requires address proof, identity proof and income proof documents which are very standard documents. This makes it an excellent source of funds in case of emergencies.

5 ways to negotiate business loan offers

You have a successful business in place and you wish to expand it. However, you do not want to go over the board with your funds. Then business loans are your best ally. Banks and NBFCs offer different types of business loans based on the requirement of the company. Some of the reasons why companies opt for a business loan are:

• For establishing a new business
• For expanding the current business
• To purchase new equipment and machinery
• To maintain the cash flow
• Require working capital for the business
• To turn the loss into profits
• For repaying outstanding dues
• For running a seasonal business

However, you should apply for a business loan:

• When you have a strong business strategy in place
• When you foresee steady cash flow in the future
• When the capital flow is greater than a business loan interest rate

The major benefit of business loans is that it does not require any collateral. Also, most of the lenders sanction the loan with minimal pre-payment charges. However, the interest rates are on the higher side.

So, you need to possess strong negotiation skills if you want the desired deal. Some of the ways to get a better offer are:

1) Establish a negotiation strategy: Determine which financial aspects are important and which ones can you give up easily on. It is essential to put forth a strong point to the lenders. Once you decide upon your factors, you can create a strategy around it and implement them.

2) Know the business risk profile: Identify the weakness point of the business, so that the lender does not catch you for the same. Rectify those errors before approaching your lender. Once you recognise the risk factor of your business, you can talk to the financier accordingly.


3) Negotiate the interest rate: As mentioned above, the interest rates tend to be higher since business loans are collateral-free. While applying for the loan, choose between fixed and floating interest rates. These rates will have a massive impact on the monthly budget. Go for the lowest rate.

4) Clear out unnecessary expenses: While negotiating the business loan deal, try to save money wherever you can. Try to curb the expenditure where not required.

5) Know the prepayment charges: Every loan comes attached with additional fees, and most of them are unknown to people. There is more to this than meets the eye. Understand the terminologies associated with the business loans and pay what based on what the business needs. Ask the lender regarding the pre-payment charges.

Research various schemes on the third-party websites. Use the business loan EMI calculator, as it enables the customers to check the results of n number of schemes. Accordingly, avail of the loan that best suits the business.

Two-wheeler loans for students: everything you want to know!

The two-wheeler is the most popular mode of transport in India. It has become an essential commodity for an average Indian’s daily commute. In fact, India is the largest manufacturers of two-wheelers in the world. To constantly keep up with the desires of the young Indians, the manufacturers produce latest models. These new bikes are designed in such a way that they suit the Indian roads as well.

With the demand for bikes on the rise, especially amongst the millennials, banks and other financial institutions have started offering two-wheeler loans. While some bikes may be at your reach, some are beyond your budget. The two-wheeler loan comes with varying eligibility criteria. One of the most popular demographics are the students.

Students, of course, would not have the necessary finance to own a bike of their choice. So, lenders offer bike loan to them under specific conditions. This article talks in detail about how students can acquire the loan.

What is a bike loan?

It is the simplest way to purchase a new two-wheeler. You have to first pay a minimum down payment to the lender, followed by equated monthly instalments (EMIs). You receive plenty of financing solutions when you go for this route. The two-wheeler loan interest rate is affordable and can be managed with EMIs.

What are the highlights of bike loan for students?

• The repayment period for student two-wheeler loans are 3 years
• The income requirement is not as high as a regular bike loan
• You will have to provide a co-applicant when availing the two-wheeler loan
• The documentation procedure takes 3 days
• Two-wheeler loans for students are unsecured
• You can purchase any kind of bike under this credit

What are the eligibility criteria for acquiring student two-wheeler loans?

The conditions differ from lender to lender. The eligibility criteria for students are:

• You should be 18 years old for applying for a bike loan
• The co-borrower, whom you get along when applying for the two-wheeler loan, should earn a decent income
• The co-borrower should also hold good CIBIL score
• The applicant should have a permanent address in place

What documents are needed at the time of bike loan application?

The student proofs:

• ID proofs such as voter’s ID, passport, PAN card, driving license
• Address proofs like utility bills, passbook, LIC insurance, ration card

The salaried/self-employed co-applicant verifications: 

• Income proofs include last 6 months salary slips, past 6 months bank statement
• 2 years’ IT returns
• Last 1 year’s bank statement
• Business registration papers

If you want a better understanding of which bike loan will fit your requirements, you can use the bike loan EMI calculator. It will assist you with your monthly budget as well.

4 types of education loans available in India

If you want to build a bright and successful future for your child, quality education is a must. However, the rising cost of education in India and abroad is a growing concern for students, as well as, parents. If you wish to opt for an education loan, banks and other financial institutions offer them to only deserving and meritorious students. That way the students can fulfil their dreams without any hindrance.

At present, almost all Indian banks and NBFCs provide education loan to students who wish to pursue undergraduate, graduate, postgraduate, professional, and doctoral degrees.

What is the scenario of education loan currently?

Student loans are available at a relatively lower interest rate. Lenders advise students to borrow education loans as per their requirements. The repayment period of such loans can vary to a great extent, depending on the loan amount and the lender.

The benefit here is that you can pay the education loan interest rate after the completion of your course. The educational loan covers the following expenses:

• Tuition fees
• Purchase of books
• Accommodation
• Transportation costs
• Uniform fees

The education loan in India are classified as follows:

1) Undergraduate loans: If you have completed your secondary education, you can take up undergraduate student loans. The undergraduate courses span for 3 to 4 years generally.

2) Graduate loans: If you want to pursue advanced or higher education across the country, you can go for the graduate education loan. However, you have to complete your undergraduate course, to apply for them.

3) Career loans: You can avail such loans if you wish to attend an undergraduate course from a technical and trading school or colleges across the country.

4) Loans for parents: Banks and NBFCs offer unsecured loans for parents who wish to finance their child’s education, regarding the tuition fees, accommodation and other such expenses. Not only parents but any other adult relative can use the education loan to enrol their kids in secondary schools, military schools, religious, private or non-public schools in India.

Education loans are the most sought-after tool today, considering quality education is unaffordable. The education loan interest rate varies from lender to lender. Girl students are eligible for an additional 0.5 per cent discount on the rate offered to the boys. Select the type of loan based on the aspirations of your child.

A detailed guide on gold loan

If you have some gold handy and been scouting for a loan, then it is time to make optimal use of your jewellery. Gold has held sentimental value for Indians over 2,000 years. As a result, people prefer preserving it for special occasions. However, the perception is fast changing. More and more people are using gold to fund their short-term goals for cheaper interest rates. But as with all investments, complete knowledge is essential before entering the financial agreement.

What is a gold loan?

If you are a short-term credit seeker, then gold loans are your best buy. You get 80 per cent of the value for your gold. For this purpose, the banks and non-banking financial companies (NBFCs) check the metal purity. You can provide any gold: biscuits, ornaments and coins, as collateral. The gold loan interest rate is competitive and is usually repayable in 12-60 months. If you are over and above 18 years old, you can apply for the loan.

What are the advantages of the gold loan?

• You can get a gold loan despite holding a bad credit score since they are secured
• You have the option to pay off the interest first and the principal amount by the end of the loan tenure
• If you are from the field of agriculture, you receive further discounts on the interest rates
• The documentation process is hassle-free as you offer gold as security. You would only have to produce your ID and address proofs
• The good thing about a gold loan is that the fluctuations in gold rate do not affect the credit in any way

Points to remember before taking a gold loan:

• If there is a default in the gold loan payment, the lenders can sell your gold and recover the pending amount
• Also, if there is default payment from your end, the lender will levy additional interest charges on your loan amount

Is it better to take a gold loan from banks or NBFCs?

Before you decide whom to approach for your gold loan, check the various schemes online. Compare the interest rates using the gold loan EMI calculator. Zero down your desired loan and then apply for it. However, you have to consider the following points:

• Banks charge lower interest rates than NBFCs
• NBFCs provide your flexibility regarding repayment of loans
• NBFCs disburse the loan in as less as 5 minutes while banks take up to 4 hours
• Most of the NBFCs do not levy pre-payment penalty. However, banks do charge for the same

Hope all your queries pertaining to the loan are crystal clear. Happy gold loan hunting!

4 car loan thumb rules to remember

Purchasing a vehicle has moved from luxury to a necessity nowadays. So, car loans are offered by every bank and non-banking financial company (NBFC). However, it is important to choose a plan that fits your budget and provides you with hosts of benefits.

Make the following pointers your thumb rule before applying for a car loan:

1) Set a budget and research: You have to decide the budget for your car. Your income plays a crucial role here. Once you have your budget set, research for options. With a vehicle loan just a few clicks away, you can opt for a loan within your price segment by researching on third-party websites instead of opting for the conventional method. You should also examine the track record of your dream car and its reviews, to ensure you have made the right choice.

2) Check eligibility: One of the most important rules is the car loan eligibility. Lenders sanction your car loan based on two factors: income and credit score. Make sure the credit report is clear, sans default payments of credit card bills and existing equated monthly instalments (EMIs). You can request the CIBIL agencies to send you a report of your credit score. This is called a soft check. Your score should be anywhere between 750-900 for acquiring a car loan.

3) Compare all available options: One of the best things about online loan applications is checking in minutes which policy fits your bill. You can select a few good deals and use the online tool car loan EMI calculator to pick out the best offer that suits your requirements. Taking time to compare options, allows you to make an informed decision and provides you benefits as well.

4) Availability of documents: As with any other loan, lenders require the essential materials to approve of your car loan. Some of the critical papers you have to keep with you while applying are:

• Identity proofs such as PAN card, driving license, passport
• Address proofs like utility bills, ration card
• Income proofs include the last 3 months salary slips, employment letter, bank statement of the past 6 months
• Form 16

If you are self-employed, the documents could differ:
• Business ownership papers
• Profit & loss statement, income computation sheet and balance report of past 2 years
• 6 months’ bank statement
• Last 2 years IT returns, proof of turnover

If you do not follow these rules, you could lose out on your vehicle loan. Your aspiration of owning a car will only become a distant dream.