Understand the concept of car loans better with the help of these FAQ’s.

If you dream of buying a car for yourself but are holding back because of insufficient funds to help you through the buying process then relief is at hand in the form of a car loan. A car loan is a financial instrument which allows you borrow the needed finance from a bank or any non financial institution along with a charge so that you do not have to kill your dreams and desires. As a customer there is a strong possibility that there will be several questions in your head relating to the nature, process and working of car loans. At Finance-strategy.com you can view a list of the most commonly asked questions and queries relating to car loans so that the concept of car loans is best understood by you.

1. What is the procedure of getting a car loan?
   To start the process you have to scrutinize all the offers available in the market pertaining to car loans and then select the dealer that is offering the best deal suiting to your requirements. You then approach the car loan dealer and select a car loan scheme. Once done with this the subsequent steps which follow are:

   Applying for the loan on the prescribed application form along with the needed documentations.

   What follows this is the processing of the application form submitted by you.

   If the authorities find your application form and documentations in place and authentic then your loan amount will be subsequently sanctioned.

   The last step would be the disbursement of the loan.

2. What is the role of credit rating in getting a car loan?
   A person’s credit profile besides revealing his personal information also provides the lender with the idea as to if you have the capability to repay back the car loan you desire to take from him.

3. What is the maximum limit that I can avail using a car loan?
   The amount of money that can be made available to you depends on your income the car that you seek to buy and the financing being offered to you. if you intend to buy a new car then the percentage of financing can be up to 90%. Though it must be kept in mind that there are some financing companies you put a tab on the maximum amount that they can lend to you in the form of a car loan.

4. Is it mandatory to have an account in the bank from which you seek a car loan?
   No it is absolutely not necessary to have a business relationship with the bank with whom you wish to take a car loan. The reason being that in any case the car loan taken by you from the bank will be protected by the lein that the bank will hold on your car.

5. What is the time limit taken for processing the loan application?
   Private Banks and other financial institutions take around 24 hours to verify the documentations and to further process your car loan documents. Nationalized banks on the other hand might take longer to get your loan application processed.

6. What is procedure for repayment of loan?
   The repayment of the car loan is done by means of EMI’s. the EMI consists of a part of the principle of the loan amount and partly of the interest charged on the amount.

7. What is repayment period offered to repay back the car loan?
   The repayment period may vary in the range of one to seven years in the case of new cars while it may be between one to five years in the case of old cars. Longer the repayment period lower is the EMI which you would be expected to pay.

8. Can I change or reduce my EMI at a later stage?
   No, once the EMI is decided and signed on the document it cannot be changed or rescheduled.

9. Can I pre-pone my loan repayment?
   Well yes there is a provision of pre payment of your car loan but it comes with a small penalty that you would have to pay to your financer which is a percentage of the amount of loan seeked by you.