Every Indian wants to be a PROUD owner of a Car... Purchasing a Car totally depends on individual’s necessity and comfort.. Car Loans, are the loans which are easy to get and quick to repay back to Banks...
But there are some important points to ponder about Car Loans... Similar points are taken care when an individual takes Home Loans... But obviously misses these as the Car Loan amounts are less...
But surely, these points are to be taken care of, as an individual can save money in 1000’s....
1) Whenever you take Car Loan, one should always ask for duly filled "Arrangement Letter".
Arrangement Letter is the letter where the details of your Loan is mentioned. Like what would be Rate of Interest (ROI) for 1st year, next 2 years and thereon...
Whether the Loan Repayment is Fixed or Floating...
If Fixed then for how many year and at what ROI.
If Floating then what would be ROI....
2) When you’ve Floating ROI then it’s necessary to check that how much % is increased over Base Rate of Bank...
For eg. currently Base Rate for SBI is 10% (which can be verified from SBI website)... Then in case of Floating ROI you may be charged 2.5% over Base Rate, then in that case your ROI would be 10 + 2.5 = 12.5%...
3) Suppose you’ve taken initially loan for a period of 5 years and then after 2 years you get some money from some source then whether is it possible to repay the extra amount in your Loan A/c. without any Penalty... Sometimes it happens that in the Arrangement it’s mentioned that after 2 years NO PENALTY will be charged for Early Closure of Loan but then Bank charges the Penalty amount for earlier closure of loan a/c.
Hope all these points help you in your future transactions in case of Car Loans or any other Loans...