If buying a new car is your dream, and you’ve finally decided to buy your first new vehicle, the first thing to keep in mind is the interest rate provided by the lender. A lender providing a lower interest rate should be prioritized during the searching procedure.
What is a Vehicle Loan?
The logic of a loan is described as borrowing money to buy the things of your necessities. So, while taking a vehicle loan, one has to borrow money to access a car and pay back the borrowed money on time.
There are two types of loans:-
A vehicle loan is a part of a secured loan that provides more security and less risk to the lender. The vehicle borrowed will be used as collateral which might be taken back if you’re unable to pay back as per the commitment. But the goal is to buy a vehicle with a lower interest rate, and secured loans provide access to the object in need with such rates.
How to take a Vehicle Loan?
- Steps included in Auto loan are:
- Perform monthly payments.
- Pay fixed interest rate on time.
- Consider the loan rate, monthly terms, and APR of various lenders to choose the one providing better service.
- Increase monthly term to pay less in a month but with a higher interest rate.
Fill in the required details in the assigned papers and read all the instructions and deals correctly before finalizing the loan.
- Other factors which influence the interest rate provided by the lender on loan are:
- Credit history: A good credit history will result in a lower interest rate.
- Annual Income: Annual income and performance determine the ability to pay back.
- Banks usually provide car loans three times the salary of a person.
- Paying down the already existing debt is considered better before applying for a new loan.
Auto Loans in 2022
Banks like ICICI and HDFC provide effective loans with a tenure of 7 years approx.
The selection of a particular loan depends upon the repayment tenure and EMI provided by the lender.
Below is the Interest Rate per annum on car loans provided by some famous banks in 2022 as per the web research:
HDFC – 7.95%
State Bank Of India – 7.20%
Axis Bank – 7.45%
Bank of Baroda – 7%