Normally, when one applies for a car loan, a loan representative or manager of the lending institution might ask you certain questions .
These questions are asked in order to judge your financial repayment capacity, current liabilities and income sources.
Sales guys often ask you question on type of vehicle, total financing needed, about your job/business, income history with certain documents.
So, if we were to put in a list of questions which a sales guy can ask from a customer, We will end up something like below
- What is your planned car make, model ,year,cost?
- Where do you work ?
- Which company are you currently working in and in what capacity?
- what is your occupation ?
- Have you filed your ITR/FORM 16 for last 3 years?.
- Do you have last 3 months salary slip?
- What is your place of residence ?
- Do you have the documents for the current address and permanent address.
- What are the other loans and credit card dues which you are having ?
- How much is your total current liability?
- Do you have personal life insurance ?
once you are ready with answers for the above questions . Please read the below segment in order to ask the Questions to the sales executive or for your insight or knowledge about auto financing process.
Most of us expect to get our car purchases financed. Car loans are easily available through either your own bank or even other banks. However, there are a number of frequently asked questions when we as buyers think about car loans. Here are some of the basic questions regarding car loans .
How to get a car loan?
You can compare the best offers from various banks and apply online within no time. You will be approached by the bank staff or laon fiancing comanies to process the loan as per your eligibility.
How much loan will I be eligible for?
Many financial institutions offer up to 90 per cent of the car value as auto loan. However, the final value might vary with lender. They check factors such as vehicle cost, type and value in second hand market while deciding the amount of loan to offer. Some banks might even lend 100 per cent of the car value.
What are the documents required and what is the processing time?
In order to get the loan sanctioned, an applicant should provide a certain documents to show the bank that he has the ability to repay back the loan amount. Even though the applicant’s credit score illustrates his creditworthiness, banks need more assurance and proof from the borrower that he is financially healthy enough to pay off his debts quite easily. To prove it, he has to provide following documents:
KYC documents for identity proof, address proof and age proof.
Income proof such as Form 16 or latest salary slip, income tax return with complete audit report of the last two financial years, etc.
Business stability proof/ownership proof
Employment stability proof
Can interest rates be negotiated?
Yes, interest rates for car loans are not fixed. They can be negotiated. If you are loyal customer to a bank and have made regular payments for previous loan(s), they might consider and revise the existing interest rate for you.
Is there an option in choosing type of interest rate?
There are two types of interest rate offered – fixed and floating just like a home loan. You can choose the bank which offers the one you need.
What is the tenure for car loan?
Typical tenures for car loans range from 1-5 years. You can opt for a lower tenure loan if you can service a higher EMI (equated monthly instalment) or a higher tenure loan if you cannot afford high EMI. Some lenders also offer loan tenure up to 7 years.
Will my car loan application be rejected?
There are chances of your loan application getting rejected if you have a bad credit score. This might happen if you have applied for loans/credit cards multiple times, defaulted on EMI payments, etc. If this is the first loan application, other factors such as income, organization, etc. will be considered.
How to pay car loan EMIs? What about pre-payment of car loan?
You can pay EMIs either through post-dated cheques or request the bank to debit your account every month through ECS (electronic clearing system) option. In car loans, though you are not allowed to make part payments, you can pre-pay the entire loan after 6 months to 1 year. However, make sure you check with your bank upon this rule. If you pre-pay before this period, there will be a penalty of 2-4 per cent on the outstanding amount.
What if I can’t pay car loan EMIs on time?
You need to make EMI payments regularly. Most of the banks allow you to miss one or two payments. But, beyond that you may be treated as a defaulter. They have the legal authority to seize your vehicle. Also, in case you default on the payment, your credit score will also take a hit and reduce your chances of loan eligibility in the future.
Can I get loan to purchase a used car?
Yes, financial institutions offer loans to purchase used or second hand cars. However, interest rates would be slightly higher for such vehicles. Other factors such as repayment capacity, car value, etc. would be considered as they do for a new vehicle.