When you plan to purchase a new or a used car, you will supposedly apply for a car loan. In case of a new car loan, you will have to apply for a higher principal amount, because the price of a new car is more. And in case of a used car loan, the loan principal will be lower as usually, the price of a pre-owned car is much lesser. But still, a used car loan is essential as the price of a second hand car is usually in lakhs, which may be hard to pay from one’s pocket.
But the major factor that makes a car loan expensive or inexpensive is the rate of interest of the loan.
What is Car Loan Interest Rates?
When you apply for a car loan in any bank or NBFC, they pay the entire loan amount at one go so that you can purchase your dream car. But you need to repay this loan principal to the lender over a certain period of time. Just because, they are lending you money and allowing you to repay as per your convenience, they charge interest from you. The car loan interest rates may vary a lot depending on various factors such as on the basis of lenders, vehicle type, credit score, loan principal, loan tenure, and borrower’s profile. The interest rate majorly differs from one lender to another. So, if you apply for a car loan at Droom, you will supposedly get the lowest car loan interest rate.
On the basis of the type of vehicle you are purchasing, the rate of interest of the loan will vary. If you are going for a new car, the rate of interest will be 9.99%, whereas for a two-wheeler the rate of interest will be 6.99%. But, when it comes to used car loan interest rate, the percentages are likely to increase a bit. The used four-wheeler loan interest rate will start from 11.99% and that of two-wheeler will start from 8.99%.
There are other factors as well like if you have a low credit score you will be considered as less reliable candidate, so the rate of interest may be higher for you. However, if you have a very good credit score like above 750+, then you may negotiate with the lender to offer you a lower interest rate than other borrowers.
Similarly, if you apply for a lower principal and shorter period of time, the rate of interest will be higher, and vice versa.
Car Loan EMI Calculator
This rate of interest will be determined by the lender. But based on the interest rate, you need to first calculate the EMI amount that you are supposed to pay every month to the lender. Before, applying for a car loan, you must calculate the EMI with the help of car loan EMI calculator, and have an accurate understanding of the exact EMI amount that you need to pay. If the EMI amount goes high, then maybe you need to lower down the principal amount, extend the tenure or request to lower the interest rate. Making these permutations and combinations, you will be able to get the proper EMI amount that fits your budget and then apply for a car loan.
Apply Car Loan Online
Finally, once you are done with all your homework of knowing the car loan interest rates and calculating the EMI amount, you are ready to apply for a car loan. There are many ways to apply for it, but you should avoid the traditional offline method as it will be hectic and involve lots of paperwork. So, it will be better to apply car loan online at any bank or NBFC as most of the lenders offer online application procedure in today’s time. However, if you apply car loan online at Droom, then you will just have to fill a simple form by mentioning a few details, get loan approval within 30 seconds, upload documents online and you will get the loan disbursement instantly without any physical signature or offline paperwork. It will be the most hassle-free, comprehensive, unbiased and independent way of applying for an instant car loan.