Vehicle Loans For The Discerning Customer

So, you have decided to purchase your two or four wheeler finally. While analysing your budget, you might decide upon buying a new or used vehicle. Whatever may be your final decision, do you feel that the best way out is to get your preferred vehicle financed through a bank or a lending institution?

If yes, the best way out is to shop for your vehicle loan, much in the same way that you shopped for your two or four wheeler needs. Vehicle loans are complicated and terms differ from lender to lender. This article makes an attempt to help you understand the process as much as possible.

The first step in taking out a vehicle loan is to identify banks or lending institutions that can readily finance the purchase of your car or bike. Some banks may finance only new vehicles, so if you want finance for an old vehicle you may still need to make further inquiries. There are various methods you can employ to discover the right bank or lender, but most people usually visit the banks online to learn about tenures, interest rates, and so on. Some banks also allow you to pre-qualify for the loan as well. Our website www.infibeam.com provides a snapshot of the loan details of most popular Indian banks. You can check out these financing options here.

Once you have made the relevant inquiries, you will need to contact the bank or its representative/s and let them know you want a vehicle loan. A person representing the bank or the lending institution will visit you and collect the documents necessary for processing the loan. These include proof of income, residence proof, salary slips, I.T. returns, residence proof and such. These requirements actually vary from bank to bank.

Once again, some one will visit you to verify these facts such as your place of residence and employment. He or she will also verify the correctness of the documents you had submitted to avail the vehicle loan. If the papers are in correct order and there are no other hindrances, the bank will now disburse the loan amount to you.

One question that you will have in mind is that how much vehicle loan you will be able to obtain. Usually, the bank will disburse the loan amount to the tune of 2.5 to 3 times the annual salary for salaried professionals. In case you are a self employed person, the bank or the lending institution will generally lend up to six times your annual income.

Yet another way of looking at this is the price of the two or four wheeler. Banks normally finance up to 90% of the ex-showroom price of a car or motorbike. If your own income might not suffice to qualify for the loan amount you desire, you can club your spouse’s income along with yours to qualify for a higher loan amount.

Once the bank decides to disburse the loan, it will charge some money for processing your vehicle loan. This amount is known as processing fee, which is usually a small percentage of your loan amount. Usually, the fee is between 1 and 2 percent. However, this fee may vary from bank to bank. Choose a bank which has low processing fees, provided other terms and conditions are attractive as well. Therefore, the processing fee charged can make a big difference to the actual amount the bank will disburse you on hand.

Today, vehicles can be financed using a number of options such as loans, lease, or hire purchase agreement. Obtaining a vehicle loan is one of the more straightforward ways of financing a two or four wheeler. In this manner, the vehicle purchased is actually possessed by the bank or lending institution. This means the car or motorbike is hypothecated. Therefore, though you own the vehicle, the bank or the lending institution is actually using it as a security against the loan that you have obtained.

Once you have cleared the dues, the banks remove this clause from the agreement you signed with them. Another way out is a hire purchase agreement. In this format, the lender purchases the vehicle on your behalf and hires it to you till you settle your dues.

Lease is a similar method, in which the financer owns the two or four wheeler, and leases it out to you for a monthly installment. This includes both the principal as well as the interest payment. The vehicle is transferred in your name at the end of the lease period and successful payment of your installments.

Our website www.infibeam.com incorporates a new four in one EMI calculator. Use this to calculate your EMI, Loan Amount, Annual Interest Rate, or Loan Term for obtaining a loan for your car or bike. Many other EMI calculators calculate just the EMI, but on www.infibeam.com, the EMI calculator can calculate other parameters as well. Also included are finance options for your car or bike. From here, you can check which bank has the most attractive rates for you to obtain a vehicle loan.

Finally, enjoy your drive but don't forget to pay your installments on time!