When it comes to buying a car, choosing a car loan is a good option to fund the purchase. Car loans are loans that are specifically intended to fund the purchase of a vehicle. In this article, we look at how car loans work, what are the common terms to understand, and how to qualify for one.
What is a car loan?
A car loan is a loan given by a lender to help you buy a four-wheeler of your choice. As a borrower, upon approval of your application, you will receive the approved loan amount to buy your car. You will have to return the loan over a set length of time with interest.
You may apply for a car loan to buy a used car or a new car. Research the car models to find the one that meets your budget and preferences. You can also check if you have a pre-approved offer on a car loan to check the loan amount that you qualify for. If you plan to purchase a car by taking a loan, knowing the eligible loan amount would help you to shortlist car models accordingly.
How does a car loan work?
When you apply for a car loan, the lender will look at your credit score, income, and other financial information. These factors will help the lender in decision-making during the review of your car loan application. If your application is approved, the lender will offer you a loan amount and interest rate. This loan offer will depend on the vehicle you intend to buy and your creditworthiness. The interest rate will vary depending on several factors, including your credit score, loan term, and income. If you do not have an income proof, you can get a car loan by using alternative ways such as getting a co-signer.
Car loan terms to understand
Before applying for a car loan, you should grasp some of the phrases that are typically used in this sort of loan. Here are some important terms to be aware of:
- Principal:
This is the total amount borrowed from the lender. You can get up to 100% value of the car you plan to purchase. - Interest rate:
The interest rate is the percentage of the principal that the lender will charge as interest during the loan term. Bajaj Finance offers attractive interest rates on car loans. - Repayment tenure:
A loan repayment tenure or term is the period for repaying your loan. New car loans and used car loans from Bajaj Finance come with flexible repayment tenures. - EMIs:
EMIs or equated monthly instalments consist of the amount that the borrower must pay to the lender each month to repay the loan. Car loans from Bajaj Finance come with the Flexi Loan facility that makes it easier to manage the loan.
Additional read: Documents required for a car loan
How to qualify for a car loan
You will need to meet the simple eligibility criteria to qualify for a car loan from Bajaj Finance. The application process is simple wherein you have to fill in a few details such as your identification details, car details, and so on. During the application process, you have to submit a few documents for verification. A representative from Bajaj Finance will communicate further to help you once you submit the online car loan application. A good credit score can help you to get the best loan offers.
Bajaj Finance offers new car finance and used car loans. You can apply for the loan online by sharing a few details. You can get a high-value loan with competitive interest rates. Flexible loan tenures make it easy for you to repay the loan.
