Monday, December 11

Your Money – Finance Column – Auto Loans or Car Loans

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Everyone dreams of owning a car at some point of time in life, but all cannot afford the same.  This is where car loans provided by banks and financial institutions come handy.  Car loans have made buying car easy as the market is full of various brands and models which can be bought with easy repayment terms and low interest rates.  As buying car requires huge investment which all cannot afford, car loans help borrower in owning a car for self use with ease or to replace an old car.

After deciding the model and the dealer from whom to buy car, the borrower must provide bank or the lender with the quotations along with other documents required by the lender such as income certificate, tax certificate, etc.  Once this is done, the lender verifies all documents along with paying capacity of the borrower and then decides on the loan application.  For the lender, this is a secured loan as the ownership will be with him till the loan is paid and he is very flexible in granting loan if all the documents are in order.

From borrower’s perspective, following points are very important:

  1. Check paying capacity first.

  2. Select vendor very carefully after lot of research regarding trustworthiness of the vendor, various makes and models available, the price, mileage, durability etc.  One can always take help of internet to do the search.

  3. Select lender after due diligence.  Check from various sources about the concessions and competent rate of interest provided by competitors.

  4. Keep all the required documents like income certificate, tax certificate up-to-date as this may affect loan sanctioning process.

  5. Provide correct information in the loan application form so as to avoid legal hurdles later.

Thus, we can say that dreaming about owning a car can be turned into reality with car loan.  As owning a car involves huge investment, one must be careful not to overstretch financially.  It is prudent to decide meticulously on various aspects before availing car loan such as repaying capacity, durability, resale value, duration and size of loan, rate of interest, etc.  All said and done, it is safe to assume that once due care is taken, one can enjoy his or her dream car ride within one’s budget and without causing any financial burden.

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