Car Loans In India

A dream for owning a car easily ends up in reality, these days with the availability of trouble-free loan schemes in India. Attractive car finance offers to the customers in India are rushed off their feet and hence picking up the right Car Loan, needs a little spadework. The finance companies in India finance the customers up to 90% of the cost of the car, depending on the model of the car and the repayment period. There are few standard car loan categories available in India, generally and creditmela.com has made an effort to explain those schemes in this section, which will give the tips to choose the right car loan scheme that suits the best of your repayment needs:

Margin Money Scheme

• This is the scheme which is preferred by the customers most, in which the customers are required to pay initially, only the margin amount of money (of minimum 10% of the total cost of the car which the customer wants to buy), along with the first EMI (Equated Monthly Installment).
• The balance amount is paid through post-dated cheques, which are issued for the balance EMIs, covering the left over period. With a repayment term of one to five years (seven in special cases), the Margin Money Scheme is the most-sought after Scheme.
• One of the major advantages of this scheme is that it has lowest EMI to be paid, compared to other schemes for the same amount of loan.
• For example, if a car's cost is Rs.2 lakhs, this particular scheme would entail you to pay a minimum of 10% up front (Rs.20.000/- in this case), and you would get a loan of Rs.1,80,000/-. The LTV (Loan to Value) ratio is 90% in this case. The interest rate quoted will be on this Rs.1,80,000/-. The interest rate is charged on a monthly basis.

Security Deposit Scheme

• This scheme entails the customers initially to deposit a particular amount of money as a security deposit against the amount provided as the loan. This security deposit amount is refundable on completion of the full period (or after the full payment of loan amount) of the loan.
• The highlight of this scheme is the customers will receive interest on the deposit, which in most cases is lower than that charged to you on the loan amount. The EMI under this scheme is normally higher than the EMIs under other schemes. (The security deposit ranging from 10-30% of the total is returned after the loan period. The deposit also earns a simple or compound interest, the tenure lasting for two to five years).

Advance EMI Scheme

• Advance EMI Scheme offers 100% car loan to the customers. Customers, in this specific scheme are required to pay up to five EMIs (Equated Monthly Installments) in advance and the balance amount can be paid through post-dated cheques covering the remaining payment period of the loan.
• One of the imperative short-comings of this scheme is that although the customer gets 100% finance, they are required to pay five to nine installments up front. Besides, customers have to pay a higher EMI amount because the interest is charged on the entire loan amount.

Hire Purchase Scheme

• Under this scheme, an agreement is made between the owner of an asset and its user for hiring of that asset.
• The agreement under which the car is let on hire to the user is made in such a way that the hirer has an option to purchase the car in accordance with the terms of the agreement.
• Hire Purchase agreement, by and large is offered by Non Banking Finance Companies. NBFCs (Non Banking Financial Companies) usually charge an amount as low as One Rupee, called Option money, on payment of which the car passes on to the hirer. The NBFCs have taken to this option, as they are not encouraged to give loans, which is a Banks privilege.

Lease Financing Purchase

Following are the list of prominent banks / finance companies in India offering car finance: S

• State Bank of India Car Loans

  State Bank of India is one of the prominent nationalized banks of India, offering out-standing car loans to suit the customers' needs......

• Citibank Car Loans

  The Citi Bank Car Loans In India That Offers Car Loans For New And Pre-Owned Cars.....

• HDFC Bank Car Loans

  HDFC Bank gives maximum loan of 90% of the invoice value on new cars. The minimum loan amount is Rs.50,000/- and the maximum amount varies depending on the car model and other features. The loan duration varies from 1 year to 7 years.......

• ICICI Bank Car Loans

  ICICI Bank, being one of the top banks in India, through its vast network offers Car Loans that are hassle-free comes with quick processing of loans with minimal documentation.......

• Maruti Finance Car Loans

  Maruti finance has a partnership with leading finance companies / banks of India to bring its customers competitive financing for getting Maruti Vehicles and is available across the states of India. Maruti has tied up with 8 finance companies to form a consortium.......

• Sundaram Finance Car Loans

  Sundaram Finance Group is one of the leading Non Banking Finance Companies in offering car loans in India. The company provides car finance for all types of cars through its vast network across the country.