In India, buying a car is every person’s dream; however, increasing costs of living don’t allow us to fulfil that dream of ours. But thanks to auto loans online, we can now easily purchase the car of our dreams without worrying about putting a dent in our wallets.
After all, numerous financial institutions offer way lower car loan interest rates as compared to traditional lenders. Further, most of these lenders provide loan amounts up to 100% of the on-road price. This means you can easily purchase a brand new car without straining your financial budget, and repay the loan amount in the form of easy EMIs (Equated Monthly instalments).
Further, financial institutions not only provide auto loans for new cars but also offer used car loans. Yet, even after knowing all these benefits, we still worry about opting for an auto loan, majorly because of the high used car loan interest rates that come along with the financial assistance. Thus, in today’s article, we have provided a list of factors that impact your car loan interest rate in India, and they are as follows:-
1. Your credit history
Banks and NBFCs (Non-banking financial companies) check your credit history to determine your creditworthiness. After all, gauging your credit history helps the financial institutions to access the risk involved with lending you the required money. Thus, your credit history and score are one of the major factors that determine your used car loan interest rate in India. You can easily improve your credit score by ensuring that you have repaid all your previous and existing EMIs on time. Also, make sure that you never default on any of your credit card bills as well as loan repayments.
Further, make sure that you’re CIBIL score is above 750 when applying for an auto loan online in India; as higher the credit score, the greater your chances of procuring a lower car loan interest rate in India.
2. Repayment tenure
As we have mentioned earlier, flexible repayment tenure is one of the highlights of obtaining an auto loan in India. However, you must ensure that you never opt for a longer repayment tenure, as your used car loan interest rate highly depends on your repayment tenure. After all, the higher the repayment tenure, the more the interest rates levied on you by the financial institutions. Thus, ensure that you properly plan out your repayments and apply for the perfect repayment tenure, which is not only of a lower duration but also less burdensome on your budget. To choose the best repayment tenure, you can easily make use of an auto loan calculator to compute your EMIs based on the principal amount, repayment tenure, and interest rates.
3. Principal Amount
Although, there are a plethora of financial companies that provide you with the option of procuring loans up to 100% of the on-road price; however, ensure that you don’t! Because the more your principal amount, the higher are your used car loan interest rates in India. Thus, make sure that you make a down payment at the dealership and then apply for a loan amount for the remaining amount; you have the choice of either making a down payment via your savings or simply exchanging your existing car.
Banks and other lenders charge equal interest rates on both home loans and property loans.
However, the home loan interest rates are a few percentage points lower than the land loan interest rates.
Plot loans are generally riskier and thus priced higher than home loans, where banks have a promise that, if necessary, they can sell and recover losses quickly.
