How to plan for financing car in India?

1. Determine Your Budget:

Calculate your budget and decide how much you can afford to spend on a car. Consider factors like the down payment, monthly installments, and additional expenses like insurance and registration.

2. Choose the Car:

Select the car you want to purchase and research its price, features, and availability in the Indian market.

3. Decide on the Type of Financing:

In India, you can finance a car through various methods:

a. Car Loan: Most people opt for car loans provided by banks and non-banking financial companies (NBFCs). These loans are specifically designed for purchasing vehicles.

b. Personal Loan: You can also use a personal loan for buying a car, although car loans often offer better interest rates.

c. Manufacturer Financing: Many car manufacturers offer their own financing options or tie-ups with banks, which can provide competitive rates.

d. Dealership Financing: Car dealerships may offer their own financing solutions, often in partnership with banks or NBFCs.

4. Check Eligibility:

Different lenders have different eligibility criteria. Typically, they consider factors like your age, income, credit score, employment stability, and existing financial commitments.

5. Compare Loan Offers:

Research and compare loan offers from various banks, NBFCs, and other financing sources. Look at factors such as interest rates, loan tenure, down payment requirements, and processing fees.

6. Gather Required Documents:

Once you’ve chosen a lender, gather the necessary documents, which may include proof of identity, address, income, and employment.

7. Apply for the Loan:

Submit your loan application to the chosen lender. You can often do this online, through a mobile app, or by visiting a branch in person.

8. Loan Approval and Disbursement:

The lender will review your application, verify your documents, and assess your eligibility. If approved, they will disburse the loan amount directly to the car dealer or to your account, depending on the arrangement.

9. Down Payment:

Pay the down payment, if required, to the car dealer as per the terms of the loan.

10. Complete the Purchase:

Once the financing is in place, you can complete the purchase of your car. Ensure you have comprehensive car insurance as it’s mandatory in India.

11. Repayment:

Make monthly payments as per the loan agreement. Missing payments can negatively affect your credit score and may result in repossession of the vehicle.

12. Close the Loan:

Once you’ve repaid the loan in full, the car’s ownership will be transferred to you, and you’ll receive the necessary documents like the vehicle’s registration and insurance papers.