Car loan myths busted

Nowadays having a car has become a must. Whether you wish to travel, or just want to spend some time at some random hill station with his family, he needs a car.

This has triggered a rise in car buying choices in India, with the predominant method of buying a vehicle through a car loan. But clearly, there are a few car financing misconceptions or unanswered facts that lead to wrong decisions being made by the people –

Poor credit record: This is a rumour, which reduces the country’s number of loan applicants. Everyone is afraid their application for a car loan will be denied because they didn’t have a strong credit background, but that’s not necessarily accurate. Auto Finance loans aren’t so quickly rejected. Interest rate and down payment can differ, but there are several chances that the loan gets accepted.

Only meant for a new car: Many citizens in the country are afraid to buy a second-hand car because of a lack of funds. They need a financing option to buy a car and have a misconception that they can’t get financing over a used car, but in fact, it’s not that difficult to get a car loan in India, even if the application is for a second-hand car. The only problem is that most investments are restricted for only specific vehicles not older than five years.

Given to an individual: It is one of the very prevalent car finance misconceptions in the Indian context that if a car loan is to be submitted, it must only be done on behalf of a single individual. Car finance cannot be in the name of two people, but, if the terms and conditions are met, more than one person can be applicants to the same loan.

Complex terms and conditions: If you get confused by the terms and conditions, then you don’t have to worry, because you can still speak to the providers of loans and obtain rectification or come up with a specific decision if you can’t reach a particular requirement. There is flexibility in general, as per the authorities ‘allowance.

Loan approval and any vehicle: It is tempting to buy the costliest vehicle that the bank is going to fund, but that’s risky. You need consider your income and expenses to see if you can afford the EMIs while having enough savings and emergencies. Your monthly car expenses do not exceed 10 per cent of your gross monthly revenue, including your loan payment.