A car loan is a type of financing specifically designed for purchasing a vehicle. When you take out a car loan, you borrow money from a lender, such as a bank, credit union, or online lender, to buy a car. The borrower then agrees to repay the loan amount, plus interest, over a set period of time, usually in monthly installments.
Car loans typically have fixed interest rates, although variable rates may also be available. The interest rate you receive depends on factors such as your credit score, the loan amount, the term of the loan, and the lender’s policies.
The car itself usually serves as collateral for the loan, meaning that if you fail to repay the loan according to the terms of the agreement, the lender has the right to repossess the vehicle to recover the outstanding balance.
How to get a bank loan to buy a car!
On the way, you may have thought, if you had a car! A car is no longer a luxury, it has become a necessity. There was a time when the dream of a car required a lot of hard work. Still, the dreams of some remained elusive. Now that day is gone. The bank is taking responsibility to fulfill your dreams.
With easy terms and moderate interest rates in easy installments, car loans are now at the customer’s doorstep. You don’t have to run behind the bank to get a car loan, the bank will come to you. Not only banks but also financial institutions are now giving loans to buy cars. Banks and financial institutions are providing loans for both new and old vehicles. Youngsters are becoming more interested in car loans as there is no hassle in taking loans.
Do not take loans for long periods
Customers may find the option of borrowing for a longer period attractive, as it results in them paying lower EMIs. But it increases the total interest. Long term usually comes with higher interest rates and customers have to pay EMIs for a longer period of time. Also, taking a loan for a longer period of time also reduces the value of the car. Normally 60 months is considered as the maximum period, which should be considered.
Get a pre-approved loan
Other than relying solely on car dealers for loans, other options can be found, where more discounts are available. It is always better to check for pre-approved loans from different banks, credit agencies and online lenders. This should be done before buying the car as it gives the customer a good idea of how much they can borrow and what the interest rate will be for them.
Loan amount: The bank is providing half of the cost of the car. Before 2014 the car-loan ratio was 70:30, now that loan has been increased to 50:50. That is, earlier the bank could give a loan up to 30 percent of the car price. But now banks give maximum loan up to 50 percent.
Interest rate: Bank Asia Officer Ariful Alam Khan said, “We provide loans for both new and old vehicles for the convenience of our customers. The rate of interest on this loan, repayable in equal installments, is 12 percent”.
Who can get a loan: Businessmen, employees, or institutions can take a car loan. But in this case the amount of monthly income is seen. City Bank, Mutual Trust Bank are giving car loan only if the monthly income is 30 thousand taka.
Repayment Mode: Car loan to be repaid within 5 years. This loan is repayable in equal installments.
Loan Process
Getting a car loan does not require much hassle. Banks and financial institutions are now tying up with car dealerships themselves to provide convenience to customers. The bank approves the car loan within 7 days of submitting the required documents.
Car loans are available for both new and used vehicles, and the terms of the loan can vary widely depending on the lender and your individual financial situation. It’s important to shop around and compare offers from different lenders to find the best loan terms for your needs.
