Car Loan’s Basic Concepts to be reviewed while analyzing Car Loan
Car loans are also considered to be one of the most important facets of revenue generation in the country and therefore income is availed by the borrowers. Therefore car loans act as the perfect compliment for the growth of the consumption variable in the economy. Before understanding the specifications associated with the functioning of the car loan you must understand the definition of the term car loan. A car loan means that form of loan where the borrower indulges in the activity of approaching a private commercial banking institution and thereby submits an application asking the banking institutions to grant him a large sum of money. This sum of money can be further utilized by the borrower for purchasing a four-wheeler through the installment method of payment or through directly paying off the amount of the car which will cover the expenses incurred for assembling the car and the other ancillary parts that are equally important for the smooth operation of the car.
Therefore Car Loan occupy the place of being one of the most wanted and lucrative loan options in the economy and are considered to be one of the basic facilities associated with the functioning of the loan facilities. Following are some of the most important rules associated with the functioning of the car loan and are considered important before understanding the mechanism of operating car loans-
Facility to Avail Instalment Payment System or Hire-Purchase System while purchasing cars- The first thumb rule or criteria that must be understood before availing a car loan facility is to understand the concept of down-payment. The amount of money paid as down-payment refers to the amount of money that is paid by the borrower while purchasing the car either in the form of cash, cheque, or bank draft. The system of a down payment is exercised to reduce the ultimate burden of payment on the consumers since they have to pay a lower amount while paying off the monthly installments associated with the functioning of the car loan amount. For example- if the borrower has taken a loan of 20 lac, then it is expected that the borrower would pay off 10-20% of the total loan amount as down payment while purchasing the car which may be an amount in the range of 2 lac to 4 lac. The amount of money paid by the borrower as a down payment while purchasing the car depends on the income capability of the borrower and his purchasing power and capacity.
Period within which the loan must be repaid- The second concept associated with the functioning of car loans is the repayment tenure recorded for the loan amount which may be in the range of 8-10 years. Repayment tenure refers to the period for which the loan is taken from the banking institution and the borrower guarantees that he would return the loan amount within the specified period as well. The loan tenure is determined according to the convenience and feasibility of the borrower and thus he can determine when he would want to end the loan tenure by paying the total amount of the installment as the principal amount and the accumulated car loan interest rate amount thereon. Bank Of Baroda Car Loan interest rate is affordable and reasonable as compared to other banks.
Conclusion:
Thus before opting for a car loan you must be familiar with the aforementioned concepts and the associated terms and conditions, guidelines, and recommendations that are existent along with the functioning of car loans. When the guidelines are prepared and the functioning becomes even more smooth and uniform you can avail of the loan facility and pay the requisite amount of interest as well. Thus go ahead and fulfill all your dreams and aspirations.
