Seeking a loan need not necessarily be a cumbersome process, especially when you are regular in your payments and have a particular financial standing. This is true with car loans too.
A bank offers various benefits to a borrower on a car loan, and also dishes out several additional facilities once he/she fulfils specific conditions. Let's check out what makes one eligible for these extra benefits.
If you are a credit card holder…
Credit card has a very important usage in case of a car loan. If you hold credit card of specific banks, you are eligible for some benefits, but not without fulfilling certain conditions. You need to hold the card/s for a specific minimum period and provide proof of recent use of the card.
The first benefit you get on a card is in the form of quick processing of a loan. The other deals with the availability of a loan for specific purposes (purchasing new car) and that too for a specified percentage of the value of the car (e.g., loan available for 70 per cent of the car value). However, this is useful in ensuring that the car loan is available from a reputed bank offering a favourable rate of interest. In most cases, such benefits are stipulated to high net worth credit card holders of leading banks.
Car Loan: Apply for Car loans
If you hold a fixed deposit with the same bank…
If you are taking a car loan from the same bank you have a fixed deposit with, ask for a higher loan without hesitation. Your bank can finance you a larger amount of loan (for example, you will get 95 per cent of the car value as a loan instead of the normal 80 per cent).
This would mean less strain on your pockets, and you save a significant amount in case it is a premium car. But why would a bank provide a higher loan. The reason is that the bank will consider your fixed deposit as a security against the loan given.
No income proof
Banks offer another facility in the form of waiving the condition of submitting an income proof. Many people would like to utilise this facility, but they should be aware that this offer has various conditions attached to it.
Its first disadvantage would be that the loan offered would be a lower one (only for 60 per cent of the value of the car as against 80 per cent in normal cases) as the bank would like to keep their risk low. At the same time, the loan would also be for a shorter time duration (only for up to 3 years against 7 years for a normal loan). Also, this facility would be available only for a specific category of people who have the necessary confidence of the bank.
Approval
Approval is an important part of the entire loan process. The shorter the time taken for this the better it is. For this reason, you have to see whether the bank allows for several conditions under which the approval is quicker. An account with the bank and a good past repayment history are the two common conditions that expedite loan approval. Account history builds the necessary confidence for the bank.
