Understanding Car Loans
A car loan is a secured loan where the vehicle serves as collateral. Banks, NBFCs, and manufacturers offer car loans with flexible tenures and competitive rates.
New vs Used Car Loans
New car loans have rates from 8.5% to 12% with tenures up to 7 years and 80-90% financing. Used car loans carry 12-18% rates with 3-5 year tenures and 70-80% financing.
Factors Affecting Rates
Credit score above 750 gets best rates. Income stability, employer reputation, existing loans, down payment, and car model all influence the rate offered.
EMI Planning
A Rs. 8 lakh loan at 9% for 5 years gives EMI of approximately Rs. 16,607. Car loan EMI should not exceed 15-20% of monthly income.
Approval Tips
Maintain credit score above 750, provide 20% down payment, keep debt-to-income below 50%, and compare offers from 3-4 lenders.