There was a time when owning a car was a luxury, not all could afford to have. Buying a car was a life milestone for everyone who could shell out those huge amounts of money all at once to buy their dream car. With growing times, changing demographics and emerging car loan lenders, for a majority of the Indian middle class, owning a car today is no longer a luxury, but in fact, a necessity made possible by taking a car loan.
You cannot imagine living without a car because that would restrict you from going places for work, duties or leisure, hindering a good social and professional life. But with newer technologies and lesser resources, the cost of cars are on a rise, often making it extremely difficult for the average individual to purchase their vehicle outright only using one’s savings. Therefore, viewing the huge demand for financing both used and new cars, leading loan lenders in India offer car loans, which are floated products, which enable you to purchase your car and pay off the car loan amount borrowed bit by bit through car loan EMIs or installments.
Benefits of Car Loans
In India, apart from the issue that paying such a huge sum of cash may disturb one’s budget, massive purchases with liquid cash could put you on the Income Tax department’s radar as well. When you get a car loan to pay for your car, you manage to retain your savings for other current and future expenses. One of the greatest car loan benefits in India that the loan is secured against the car itself, so, you do not have to mortgage your property or other assets to get a car loan. You also get to use your car while you are servicing the car loan term, so a few years down the line you have added to your original savings and have the opportunity to own the car have paid off your car loan completely. This gives you the chance to augment crucial credit history by procuring a car loan and strictly adhering to the repayment cycle. A good credit history including timely payments and cleared debts help you obtain further loans in the future. Car loans, therefore, are a very safe and certain way of purchasing your own car.
Car Loan Characteristics
Car loans in India generally carry the following features:
- One can opt for new or used car loan depending upon the need and the kind of car requirement. Though, most people prefer a car loan over new cars and not the second-hand ones.
- Car loan option in India, for a majority, is an alternative that lets them purchase a car which is better than the one available in their budget since the car loan approval is quick.
- Car loans in India generally provide a fixed rate of interest option while repayment through EMIs. This keeps you assured of a fixed repayable amount on a monthly basis towards the car loan, facilitating better budget planning without disturbing your usual expenses.
- A bank offering car loan mostly also provide flexible repayment tenure options of 1-7 years to repay the car loan amount in regular EMIs.
- Car loans in India are often easier to avail when compared to any other loans and involves easy documentation with clear instructions and guidance throughout the full car loan approval and sanction process.
- Car loan borrowers can avail loans up to Rs. 1.5 cores, mostly comprising of 100% of the vehicle’s on-road price.
- Most banks have reasonable EMIs within flexible tenure options to offer on Car loans.
Car Loan for a Used Car or a New One
Car loans are available for not just buying brand new cars but also used ones. On the face of it, a used car is cheaper so clearly, the car loan amount required will be lower, and so will be the car loan EMIs. But in most cases, a used car requires a higher upkeep cost and there might be additional re-registration costs associated with it, neither of which will be covered by the car loan. So, for a large majority of the prospective car purchasers, approaching a bank or NBFC for new car loan options is preferred over used car loan options. Another factor is that the car loan approval is much swifter for a new car.
But buying a pre-owned car is not that bad of an option either. We here list down a few reasons why buying a Pre-used car via a car loan is a good deal too :
- First and foremost, it is immensely pocket-friendly. It is obvious that a second-hand car will cost less, thereafter, the pre-owned car loan financing it will also be a lesser amount compared to its new-car alternative, meaning smaller monthly installments to pay.
- It is evident that the demand for second-hand car loans is lesser than that for a new car loan. This is a reason that most banks feature used car finance as an important component in their products, thus, these products are customized and added with extra benefits to appear as customer friendly as possible. Therefore, a car loan gives lots of features and rebates but less of the hassle associated with buying a new car loan.
- And the best part, in case of a pre-owned car, the choice of models isn’t dependent on its current on-road price. The amount you invest in a new car of a particular model can buy you a higher model in the same amount or probably even lesser in case of a second-hand car of the same make. Plus, the insurance cost of a pre-owned car is lesser and the prospect of depreciation is considerably less when compared to new cars. So, you can retain its original value when you intend to resell it in the future.
Top Banks offering Car Loans in India
India, being one of the fastest growing automobile markets in the world, homes a number of auto finance companies to tap the booming market. Automobile sales account for 80% of the total passenger vehicle market and are expected to grow at a fast pace in the coming years. As a consumer, comparing car loans is a must, as that allows one to narrow down the best available options.
The increased demand for cars and car loans in India fueled by an expanding middle class has led most banks and NBFCs in India to provide car loans to people from various walks of life who keep researching for the most popular car loans available. Key providers of car loans in India include Axis Bank, State Bank of India, HDFC Bank, Union Bank, ICICI Bank and Sundaram Finance:
Unique features such as the overdraft facility and the provision of optional SBI life insurance cover has contributed to SBI car loans’ lasting popularity. For all the right reasons shared above, the SBI car loan has its vast share of loyal and enduring fans. The public sector behemoth named SBI has little competition in India, known for its people-centric approach; it will continue to remain a premier choice in the years to come. Here, we sum up SBI Bank Car loan offering for you: