Gone days when owning automobiles was a luxury, it has become a requirement for all auto loan that brings your dream within your reach. Auto finance refers to the financial products that allow acquiring a car loan no prepayment penalty, including auto loans with no credit check and leases. A loan is taking money from any individual, entity, or organization. The one who takes a loan is known as the borrower means the recipient. The recipient is usually liable to pay interest to the amount they took until repaid means the payment to the principal amount. The most trending method of buying an auto is borrowing the amount and then paying it in installments.
Over 80% of the new automobiles are purchased through repayment done lumpsum with cash—two primary techniques of borrowing money to buy an auto: direct and indirect. A direct loan means one that is arranged with the lender directly. An indirect loan is financed by the auto dealership where the auto is purchased. An indirect loan is not a technical loan; when an auto buyer takes a financing loan from a dealership, the buyer obtains fund facilities from a dealer, and the borrower and dealer sign a contract rather than an agreement to loan. As automobiles lose value with time, auto loans come with high-interest rates. The higher the time an automobile loan is paid, the higher the overall cost. In auto loan no prepayment penalty, the automobiles itself considered collateral.
Requirement For Auto Loan
Loan approval for an car loan with no prepayment penalty is quicker than a home loan. A few criteria need to approve as mentioned below:
1. Cibil Report And Score
Lenders look at your current credit health added to your past payment pattern history of payments. High CIBIL attracts lenders, and a good credit profile can determine the final status of approval.
2. Income Status
The lender company checks how stable a recipient is and a steady source of his monthly income. The Source of monthly income ensures the regular interest payment and the principal amount.
3. Current Loan Repayment
The lender keeps an eye on your current EMIs before granting the loan. The determination of your EMI outflow and income ratio.
4. Documents Required
The documents required vary from lender to lender. However, the documents needed are Address proof (Aadhaar, passport, voter id card, Ration card, or driving license), Identity proof (Aadhaar, passport, voter id card, PAN card, or driving license), and salary (bank statements, salary slip, latest income tax return).
- The age of the recipient must be between 18 to 75 years
- Minimum monthly income of Rs. 20,000
- At least a year of employment with the current job
- Must be self-employed or salaried
Banks offer loans up to 90% on first-hand vehicles and 10% less for second-hand. The interest rate depends on the type of automobile and the principal amount. The repayment of the principal amount based on monthly income and the ability to pay is typically between 12 to 84 months.