Owning a car is no longer a luxury even in countries where average income per person is very low. It has become a necessity with the changing times. But many a times money cannot be spared to buy giving cash due to other priorities. Loans made available by various lending companies come handy at such times.There are many lenders such as Bajaj Auto Finance (not for four wheelers though),
Country Wide and banks like ICICI, HSBC etc. Even nationalize banks offer car loans and these are the lowest rate ones. Also the greatest advantage being that you can pay money more than your loan installment to the loan account. You can go on paying as much as you can additional to the loan amount and it is deducted from the capital amount. You can thus reduce your loan amount when you have some surplus money to pay. The foreclosure charges are also very low if you wish to foreclose.But mind you, against all these pluses, these banks demand a LOT of formalities to be completed for the loan sanction as against banks like ICICI. These banks sanction loans very fast but charge heavy interest. Also the partial payment option is not available. So you either need to complete the loan term or manage to foreclose completely. The foreclosure charges are also very heavy.Car loans are taken for many purposes. To buy a new car (New car loan), to buy a used car (Used car loan), Cash credit against your car, Refinance on your car, refinance in form of a term loan…. etc. The loans with the lowest interest rates are usually for the new cars. A used car loan attracts a high interest rate and often a low tenure. If you already own a car, which is loan free, and you need some cash, you can opt for Cash credit against your car or refinance in form of a term loan. The term loan is best in such cases as it attract a low interest rate as against the cash credit. A cash credit is best suited for businesspersons who need some money as a stopgap arrangement till he recovers his dues. He can immediately fill the cash in his cc account as soon as he recovers his money. Thus the interest would be charged for only those numbers of days for which he uses the money, and at the same time he will have ready cash in form of cash credit available in his bank whenever a stop gap arrangement is needed again. So if you need some cash and are thinking of a loan on your car, think of your purpose and the amount of time in which you can pay back the loan amount, and then decide whether a cash credit would be fine or a term loan.Almost all these lenders have websites where you can compare the interest rates and apply for the loan. Recently I applied for a used car loan with the ICICI and got it sanctioned within 4-5 days! If it is a new car, the car dealer often delivers the car and then processes the loans. There are various options if you are thinking of a car loan… you need to research a bit and find the best one for you.