What is a Car Loan?

A automobile was once considered a luxury that not everyone could afford. For anyone who could afford to spend such large sums of money all at once on their ideal car, purchasing a car marked a significant turning point in their life. Due to expanding populations, shifting demographics, and the emergence of new auto loan providers, owning a car is now a need for the majority of Indian middle class people rather than just a luxury, made possible by taking out an auto loan.

There was a time when owning a car was seen as a luxury that not everyone could afford. Buying a car was an important life milestone for anyone who could afford to invest that much money all at once on their dream vehicle. Owing to growing numbers, changing demographics, and the appearance of new auto lending companies, most Indian middle class individuals now consider having a car to be a necessity rather than a luxury, which is made feasible by obtaining an auto loan.

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 having 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.