Advantages And Disadvantages Of A Car Loan

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Merits of a car loan

Loaning a car is simple. The best advantage anyone could ever find, you don’t need to shred sweat for hours on one go to buy a car. You can just take out a loan from a bank or NBFC that has been legally authorized and licensed to provide you. The processing in this century, this year is easier than ever. The loan can be availed both online and offline. Most people today prefer the online method to the face-to-face way, as it can be done from anywhere in the world without having to travel a single place. The bank or NBFC just deposits in your account within 2-3 days from the day of approval and you can pay the Equated Monthly Installment(EMI) and principal amount using net banking.

Another gigantic advantage is that you don’t have to drain your saving amount all at once, Car loans are providing loans for up to 90% of the car’s ex-showroom value and few are even providing 100% of the car’s rate. Therefore, the choice of the loan amount is all yours, if you meet the eligibility criteria to the mark. The tenure of the loan amount is another merit, banks and NBFCs offer up to 84 months to avail a loan, with a minimum loan term of 12months. So you can choose anywhere between that time. A shorter loan is beneficial for those who can pay off the loan very soon and long tenure if you’re facing a challenge in paying the large amount as monthly instalments. The repayment options are many too. You can either write a cheque or cash or do debt automation, the bank account each month detects the interest on time from your savings, but to avail this facility you should have enough funds in your savings account.

Additionally, car loans have two types of loan: secured loan and unsecured loan. Not many loans have this luxury. A secured loan is with collateral and an unsecured loan is without collateral. If you want only the minimum as loan amount and if you can pay the monthly instalment on time, you can go for an unsecured loan but if the money needed is high and you want low interest then a secured loan is for the best. The choice is completely yours.

Demerits of a car loan 

A boon is always paired with a bane. It is a no-brainer that every single thing or person has both good and bad. Car loans are not luxury loans but they are still loans and the loans are though provided from the legalized institution, they expect profit and the profit is in the Equated Monthly Instalment or widely known as EMI. The car loan interest rate is in the range of 8%-16% depending on the loan amount, tenure, and the type of loan(here: new car loan, used car loan, or loan against cars). The interest rate is comparatively higher than a gold loan and at times is hard to pay. Though the processing is easy, the banks and NBFCs have eligibility criteria that need to be met by the applicant. If you have an unstable job or if you don’t meet the minimum salary requirement, availing a loan can be anywhere from highly challenging to impossible. That is a massive con and the CIBIL requirement is huge too. To avail a car of your choice with the loan amount and interest you want, you should most definitely have the least score of 700. As mentioned earlier, the loan can be secured or unsecured, so if you opt a secured loan and are unable to pay the interest amount each month, the bank or NBFC has the right to action your car and can lower your CIBIL large.

Yes Bank Car Loan is a well-known car loan that has attractive offers and is extremely popular for its down-to-earth services. The rates are affordable and profitable to everyone.

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