Misconceptions About Car Loans
It is important for all of us to be informed about what goes around us. When it comes to car loans, there are some misconceptions that we believe happens in real. Let us have a look at the following common misconceptions:
Everyone aspires to own a car in life. The convenience of car loans and its offers boost our confidence in buying a car. A car loan can be short to medium term and also offers a lot of flexibility. However, it is important to be well informed about the Car Loans before we avail one.
Let us highlight some of the common misconceptions:
1) 100% financing on your car
We often see advertisements about 100% financing of the car and that too at an interest rate of interest. However, when we actually avail of this offer, we get to see a different picture. Banks/NBFCs are willing to finance our car up to 90% of the invoice value. If we want it to be 100% financed, then the rate of interest would be a lot higher.
Let us understand this with an example:
If the value of our car is INR 10,00,000, we will have to make a down payment of at least INR 1,00,000.
2) 0% Interest Loan
We often get offers that state that our car would be financed at 0% interest. Yes, this could be possible but not everybody is lucky to get this offer. Adding to it, 0% interest loan is never hassle-free but limited to flexibility. The tenure is short and down payment amount is very high. This leads to high monthly obligations.
3) Avail loan through a car dealer to avoid rejection
Credit score of an individual can never be controlled or influenced by any car dealer. Banks have some products and policies that can be opted for even if we have an average credit score history. We can avail of these products only if we fulfill some pre-defined norms of the Banks/NBFCs. A poor credit score would often get us a car loan at a higher rate of interest but our credit score cannot be influenced by any car dealer.
4) The car dealer can get us the best ROI
This is so not true. The car dealer would never compare rates and therefore, cannot offer us the best deal. Car dealers have alliances with specific Bank/NBFC and just try to sell those products only. We have to be an informed customer and do our homework on the same to get the best car loan deal.
5) No used Car Loan
We can definitely get a used car loan and very few people know about this. Car loans are just not available for new cars but used cars too. There are other products like car re-finance, car loan top up etc.
Used car loans are more affordable than borrowing from the private sector as it helps us save a sizeable sum of money. The only pre-requisite for a car loan is to ensure that our vehicle’s date of manufacture falls within the lender’s parameters.
Now that we have a better understanding of Car Loans, we should consider our options carefully and make an informed decision.
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