Vehicle Loans

Apply For Vehicle Loan

Vehicle Loans

If you want to buy two wheeler or four wheeler and have some financial issues then applying for vehicle loan is the best option that will help you to buy your favorite vehicle. In these days almost every bank avails the facility of loan for two wheeler as well as four wheeler in affordable interest rate. To get easy approval of loan applicant need to follow the terms and condition of respective bank and following guideline is quite mandatory to avoid any condition of loan disapproval.

Gone are the days when you have to wait until you do not have enough cash to book a vehicle for your traveling conveyance, now, with finance services introduced by banks and other financial institutions, it has become easy to buy vehicle in easy monthly installments. Vehicle loan is a loan sanctioned to individuals so that they can purchase a motor vehicle. The cost of the vehicle is distributed in easy monthly installments so that one never has to compromise with their desires and lifestyle needs.

Vehicle loan: Secured loan

An auto loan is secured type of loan where the borrower serves the purchased vehicle as collateral security so that if in case, a borrower fails to pay timely installments, the lender can cover the outstanding cost by taking the borrowers ownership from the vehicle, in simple words, the lender seizes the collateral security. The vehicle is then refinanced to third party in order to recoup the losses.

When a lender seizes a borrowers vehicle due to failure of installments, it is referred to as repossession, where the borrowers ownership is taken off until the due payments are paid off. If the due amount is not paid within the given period of time, the lender has a right to sell the motor vehicle to the third party to cover the losses. Thus, secured loans are typically less risky for the lender than the unsecured loans like personal loan which do not involve any collateral security to cover the losses. Therefore, borrowers creditworthiness and good credit score is the only factor that is considered to pass the unsecured loans. However, the same is also checked to sanction the secured loan and even if a borrower has poor credit score, the loan is, generally, sanctioned at higher interest rate.

Bank Approve Loan for Following Purpose

1. Bank will approve the loan when someone applies to purchase new two wheeler vehicles.
2. Loan will be approved in case if some apply for loan to buy bus, car, truck, jeep, autos or any heavy or light vehicle.

Process to avail vehicle loan

1. Offline: This is traditional approach to apply for loan. As per policy, regarding this type of loan, candidate needs to visit their nearest bank branch and then ask for application form, he/she need to submit their all legal and required documents to complete the process and in case of any further need bank will inform to respective candidates.

2. Online: In modern days online facility is one of the main reasons behind the quick processing of multiple tasks. If someone want to apply for personal loan online then firstly he need to open the official portal of bank where he want to apply for loan, then he just need to fill the application form and at the same time he need to submit the scanned copy of all mandatory documents. After the review process bank will approve loan as per eligibility of respective candidate. Applicant can easily pay their EMI online in just few minutes in comparison of traditional way of EMI payment.

Fees and Charges Regarding Vehicle Loan Processing

1. Processing Fees: Every bank charge this to process the loan approval request of candidate. Generally amount depends upon the loan amount.
2. Administrative fees: This is completely different from processing fees that bank charge for administrative cost.
3. Prepayment Fees: This fee specify the amount that bank charge for paying the EMI before the last date of payment.
4. Copy of an Account Statement: Not mandatory but some bank may levy this fees as per their policy.
5. Late Payment Fees: This is conditional that customer need to pay if will not pay the EMI on time.
6. Conversion Charges: If someone apply for loan on floating interest rate then this fees will be applicable.

Eligibility Criteria of Vehicle Loan

Every bank that offers this facility has their rules and regulation regarding distribution of loan, to ensure that customer fulfills all the eligibility as per policy of their bank. So as per their condition candidate need to fulfill all the below specified conditions

1. Minimum Income Criteria: Applicant must be salaried or self employed so that they can easily pay the EMI installments. It is necessary to ensure that income is a per eligibility standard.
2. Age: As per policy candidate minimum age must be 18 years as per policy of government, some bank also put the condition of minimum age bar of 21 years. Maximum age of applying loan is 65 years.
3. Employment Condition of Candidate: As per the policy applicant must be employed somewhere, on the basis of employment bank approve the loan amount. Income source must be regular so that process can be completed without any complication.
4. Permanent Mobile Number: Bank always asks for regular contact number to make connection with customer easily to share information with him as per bank need.
5. Documentation: Submission of all mandatory data is one of the most important steps that everyone must follow. If someone applies for loan of bike then they will get flexibility in documentation.
6. Credit Score of Applicant: Candidate CIBIL score must be great otherwise bank will never approve the loan. So always check your credit score before applying for loan.
7. Employment Tenure: This is also one of the vital factors that pay important role in approval of loan. Some bank also provide the facility for student to apply for bike loan even if they are not employed yet, student just need to follow the same process that do for education loan.
8. Residential Proof: If you relocate frequently then you may face problem in loan approval at the same time if are living in same address then it will be easier for bank to approve the request of candidate as per their eligibility.

Features of Vehicle Loan

1.Margin of Finance: Maximum numbers of bank avails this facility to attract customer and allow them to buy bike or other vehicle on 10% down payment. Remaining amount can be paid through EMI.
2. Annual Income Leverage: As per income of applicant bank set the tenure of loan payment. If income is low below to income tax criteria then repayment tenure can be extend by the bank.
3. Partnership with Dealer Regarding Loan: Some reputed and capable agency offers this facility to customers to easy their problem regarding loan approval and formalities.
4. Credit Score: If you are going to buy vehicle for the first time and then paying the EMI premium on time then it will help you to make your credit score stronger.
5. Flexibility in Repayment Tenure: As per customer request tenure can be set by the respective bank and agency. Common criteria of tenure are between 1 to 4 years.
6. Foreclosure Charges or No payment: This policy or this type of charges depends on respective bank policy to impose these charges. In some cases it is good to apply this amount that makes amount debit easier and quicker.
7. Other Covered Costs: These costs include the products, registration, accessories and some other vital segment of vehicle. It is nice concept to protect the vehicle without wasting extra amount.

Interest rate

The interest rate for the motor loan, generally, depends upon the borrowers credit history and CIBIL score. Higher the score, lower the interest rate and better chances of getting a car loan at competitive prices. A borrower with stable monthly income and high credit score can easily qualify for the motor loan. Thus, it is advised to first check CIBIL score online before applying for vehicle loan. An applicant can also calculate the principal and interest amount for the loan.

Advantages of the loan

Well, in this fast moving world, having a vehicle has become a basic necessity to travel miles of distance every day. Whether going for office, school, or to relatives place, you will definitely need a vehicle to cover the geographical distances. As it has become a basic necessity, the banks and other financial institutions have came forward to meet the need. There are certain benefits of vehicle loan offered by the lenders:

1. Makes easy to buy car: Now, a borrower does not have to wait to buy their dream vehicle, just apply for vehicle loan online and get the loan. However, before passing the loan, the lenders check CIBIL score and the creditworthiness of the borrower. Now, buying a dream car is in everyones budget, book your car today.

2. Flexibility to choose the tenure: A borrower can choose the vehicle loan tenure of up to 7 year. However, the interest rate may fluctuate according to the tenure period.

3. Loan for buying used car: Many banks offers finance for used vehicles, though, the interest rate for such loans are bit higher than interest on new car loan and thus, the loan to value (LTV) ratio will be lower than the new car loan.

4. Negotiable interest rate: Unlike any other loan, the interest rate for motor loan can be negotiated between the banker and borrower after taking into consideration certain factors such as monthly income, previous record with the bank, and car loan credit history of a borrower.

5. No collateral required: A borrower is not required to provide any collateral security to get the loan because the vehicle itself will be treated as security with the bank. If in case, a borrower fails to make timely payments of the monthly installments, then the bank reserves all the rights to seize the vehicle and sell to third party to recover the outstanding funds.

6. Flexibility to choose the payment mode: A borrower can choose the payment mode flexibly through post-dated cheques or activating auto-debit feature where the equated installment amount gets debited from the borrowers bank account in the form of EMIs on every due date. The borrowers have to make sure that they have enough balance available in the bank account on every due date to avoid penalty charges.

Things to take into consideration before buying a car loan

Interest rate
Whether buying a new car or used car, it is important to calculate interest rate for car loan because the interest rate fluctuates according to certain factors such as income, relationship with the bank, and credit history. Also, the interest rate can vary depending upon the length of the loan. Thus, it is best to apply for vehicle loan online to get the best and cheaper interest rate on both new and old car.

Tenure period
A motor loan typically has tenure options from 18 months to 7 years. A longer tenure term typically has lower monthly installment sum, though, the interest charged is a bit higher in the longer tenure.

Payment mode
A borrower can choose the vehicle loan payment option through post-dated cheques and auto-debit EMI option. Make sure the interest rate does not fluctuate for both the options.

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