Buying a vehicle is a dream for many. Owning a car or a bike gives you the freedom to commute at your own time and pace. However, with every passing year, the prices of vehicles are increasing. Thanks to the growing lending sector in India, you can easily apply for a Vehicle Loan to fulfil your dream of owning a vehicle. Read on to understand what a Vehicle Loan is and its various types and features.
A Vehicle Loan is a loan that allows you to purchase two and four wheelers for personal use. Typically, the lender loans the money (making a direct payment to the dealer on the buyer’s behalf) while the buyer must repay the loan in Equated Monthly Instalments (EMIs) over a specific tenure at a specific interest rate. The EMI comprises a portion of the principal amount and the interest component. Once you repay the loan in full, the lender transfers the vehicle registration in your name.
You can also apply for a Vehicle Loan to buy these vehicles to transport goods or company personnel. Common examples of commercial vehicles include buses, trucks, tractors, tippers, cabs, etc.
Your eligibility for a Vehicle Loan depends on your credit score and net (in hand) monthly income. Most lenders offer 75% to 100% of the vehicle's on-road price, based on its type and price. You can also get a loan to buy pre-owned cars and other previously used vehicles.
Today, you can take on a Vehicle Loan to buy various kinds of vehicles in India. Below are the most common types of Vehicles Loans offered by Indian lenders.
You can get a Car Loan to purchase a brand-new car of your preferred brand. Lenders generally offer up to 90% financing of the car's on-road price, while you have to pay the remaining 10% as a down payment. The on-road price of a new car includes the ex-showroom price, Regional Transport Office (RTO) registration charges, insurance costs, road tax, etc. A Car Loan generally comes with a seven-year repayment tenure. You can repay the Car Loans in affordable EMIs over your chosen tenure.
A Two-wheeler is an excellent vehicle that allows you to navigate traffic, especially in a densely-populated city. It is compact, requires less fuel and helps you cover shorter distances comfortably. With Two-Wheeler Loans, you can buy geared motorbikes and non-geared scooters. Most lenders offer up to 100% financing on Two-Wheeler Loans, with a maximum repayment tenure of five years. The maximum financing offered on such loans is up to Rs 10 Lakh. Once again, you need to provide your income proof and credit scores to be considered for this loan.
Another type of Vehicle Loan you can opt for is a pre-owned Car Loan. Purchasing a pre-owned car is a cost-efficient alternative to buying a brand-new car. Lenders generally offer up to 75% financing against pre-owned cars. The car is hypothecated with the lender till the repayment period ends and you repay all EMIs. However, the car's age and the new repayment period should not exceed eight years.
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