Frequently Asked Questions - Car Loan
Car Loan - Frequently Asked Questions
Find answers to all your queries related to Car Loan ranging from application procedure to eligibility criteria, interest rates, and documents required.
Will the lender provide 100% of the cost of the car?
Some lenders do provide 100% of the cost of the car. Others provide 85% of the “on-road” value of the car.
Do the lenders allow me to pay off the loan before maturity?
Yes, many lenders allow you to repay the loan early. Some lenders require a 6-month minimum outstanding period and some have fees for early payment.
Do all types of cars qualify for financing?
Most types of cars do qualify for financing including sport utility vehicles, sedans, and multi-utility vehicles. Each lender has policies for what types of cars they will loan against.
Does the Bank require security?
Most lenders require the car to serve as security (collateral) and may require a guarantee from the borrower or a co-applicant depending on your level of income.
Why apply for a car loan with FinMarket.in?
- Receive various offers for a wide variety of car loans.
- FinMarket's application saves time and allows you to compare and find the best car loan for you.
- Be informed of your EMI payment details.
- Choose the right offer for you from a wide array of lenders.
- No need to visit multiple banks to secure multiple offers.
- Fill in your information just once and receive multiple offers from lenders.
- Receive offers for products and deals from top lenders that are targeted to your unique needs.
Should I get a car loan from the bank where I have an account?
Applying for a car loan with the same bank where you have an account may help you get quick, hassle-free approval. However, by doing this, you may miss out on some of the best deals on car loans offered by other lenders in the market. So, it is always a good idea to compare loans before choosing one. The easiest way to do this is to apply online through FinMarket.in. With a single online application, we bring you the best car loan deals from various leading lenders in India.
How do I calculate EMI for Car Loans?
EMI calculators are a common feature on the websites of most lenders. This EMI calculator works in a simple way. Once you enter the details of your car loan, including the loan amount, interest rate, and tenure, it calculates the EMI in a matter of seconds. However, to manually derive the EMI, you need to apply the principal amount, tenure, and rate of interest in the traditional mathematical formula used for calculating EMI, which is as follows:
EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1]
Here, P stands for the Principal Amount, R for the Rate of Interest per month (which is, Interest rate per annum/ (12x100), and N refers to the number of monthly installments.
Is a guarantor required to sign for my car loan?
You do not need a guarantor for car loans unless you fail to meet any of the eligibility criteria such as the age, income or credit score requirement.
Will I get any tax benefits for a car loan?
No. Car loans do not bring any tax benefits. Unlike home loans, car loans are not eligible for rebates. So always remember not to exceed your requirements while taking a car loan.
Are interest rates for car loans negotiable?
If you have had a good repayment history with the lender for your past loans, then you may be able to leverage your prior relationship as well as your good credit score to negotiate and get a car loan at a lower interest rate.
How do I close out my Car Loan
There are two ways in which you can close out your car loan:
- By paying the EMI regularly, throughout your full loan tenure
- By paying the outstanding amount all at once and closing out the loan. If you choose to do this, be aware that you may have to pay a certain percentage as a prepayment penalty to your lender.
More importantly, remember that paying off the due amount does not complete the process of closing a car loan. You should also obtain a No Due Certificate from the lender. When you buy a car on loan, the car is hypothecated (pledged as security) to the lender. Once the loan is paid off, this hypothecation has to be cancelled, for which you should approach the Regional Transport Office (RTO) and produce the No Due Certificate from the lender. Following this, your RC book is updated by removing the hypothecation.
What may be the reasons for car loan rejection?
Your car loan application may be rejected for one or many of the following reasons:
- Poor credit score
- Defaulted payments in the past
- Multiple loan rejections in the past
- Insufficient income
- Inability to produce any of the requested documents