Rising standards of living and good financial positions have increased the desire for owning a car in many people. Keeping pace with this growing demand, financial institutions have made car loans accessible to the consumers. Acquiring loans for cars is much faster than getting home loans, as the former requires very less paperwork and no verification of any asset is necessary as is the case of the latter.
Nowadays, the lenders have a tie up with most well known car dealer showrooms and the customer can have all the paper work done at the showroom itself once he has zeroed in on the model of the car he is interested in buying.
Car loan applications can also be made with other lenders and certain procedure has to be followed while doing this:
Firstly the applicant has to approach different lenders and make inquiries about the rate of interest they are charging on the car loans, most lenders do negotiate on the rate of interest, so it is the applicant’s knack of negotiation that helps to land him a good deal.
After the applicant has decided on the lender he would be borrowing from, the lender collects the requisite documents like proof of income, residence and identity proof and other such documents which the lender may require for processing the car loan.
After the relevant documents have been submitted, a field investigator visits the residence of the applicant to verify the facts stated in the documents and also to clarify any doubts which the investigator might have. If the investigator is not given satisfactory answers to his queries the car loan application could be rejected.
Once the investigator submits his report to the lender and he is satisfied about the authenticity of the documents then the loan is approved and the loan amount is handed over to the applicant either by Demand Draft or a check, all this process is over within a week of the applicant putting in an application for a car loan.
Loans for cars also come with a lot of add-ons like free insurance, accessories and service contracts etc which make them even more attractive because these add-ons are not available to customers who make outright full payment while purchasing a car. No wonder over 60% of the cars sold are financed vehicles
The borrower while opting for car loan must show extreme vigilance. It is equally important to have all the relevant information about the loan, the EMI that would have to be paid etc. Also, reading the fine print of the terms and conditions before accepting the loan amount would help immensely.
It is always better to keep oneself well-informed about all the loan facilities and formalities before entering any car showroom. A customer needs to keep his head on his shoulders and not get carried away by sales talk. As eventually, it is the customer who has to pay the EMI every month.
Remember not to over-extend your resources as you will be left with no money for maintenance, also it could leave you with little or no savings.