Getting your own car may be a dream that you have fostered for long. However, the dream may have been a little hard to achieve due to the lack of funds. But if you have a stable income and you really want to own your own vehicle. You should opt for a car loan from a good lender and get your dream car today!
The process to get a car loan is quite easy. However, before getting the loan, you should understand how a car loan works and how the interest rates for car loans are calculated. This is an important thing to note as getting the correct rate of interest is crucial in having the most suitable loan.
Interest Rates for Car Loans in India
There are two ways in which the interests for car loans are calculated in India. They are:
- Fixed-rate of interest –
Here, the rate of interest is fixed for the entire duration of the car loans tenure.
- Floating rate of interest –
Here, the rate of interest fluctuates as per the market conditions during the tenure of the car loan.
Both of these variants have their own sets of merits and demerits. This is why it is very important for you to choose the correct type of interest rates for car loans. That matches your needs and financial capacities.
Differences Between Fixed and Floating Interest Rates for Car Loans
Now, let us take a detailed look at the main differences between the fixed and floating interest rates for car loans:
|Fixed interest||Floating interest|
|Rate||The biggest difference lies in the fact that the rate of interest in this variant of a car loans stays fixed. The interest rate is the same for the entire duration of the loan tenure. If you take a car loan at the rate of 10.4%, you will pay an interest of 10.4% in the first month and 10.4% in the final month as well.||The rate of interest fluctuates in a floating interest rate car loan. Here, the rate differs as per the market conditions. So if the car loan starts at a rate of 10.4%, the rate can go down to 9% in a few months but it can also go up to 11%. This is a bit risky, but the risk can pay off as well.|
|EMI||Since the rate of interest on the car loans is fixed for the entire duration of the loan, the EMIs are also of a fixed value. There is no change in the EMI as the principal and interest amounts are the same.||There can be fluctuations in the EMI amounts as well. The car loan principal stays fixed, but the interest component keeps changing. This makes the EMI values get altered from time to time as well.|
|Risk||There is no risk involved here as the rate of interest remains fixed.||As stated, this is a riskier type of car loans as the loan can become more expensive if and when the interest rates for car loans sharply go up.|
|Budgeting||It becomes easier for the borrower to make a budget and sanction the monthly EMIs into it. This is easy since the value is a known and fixed amount.||It may become difficult for the borrower to stick to his budget, especially when the rates go up and the EMI value becomes larger.|
Listed above are the main differences between the fixed and the fluctuating rates of interest rates for car loans. Go over the differences and then decide which type of car loan you want to go for.
Getting an Online Car Loan
Getting a car loan has become very easy these days. All you have to do is download the app of a good NBFC and make an instant application for the car loans. The application form is a simple and straightforward one. The documentation process is simple too and so you don’t need to waste too much of your time or effort when applying for the car loan. Submit the required data, choose the type of interest rates for car loans you want and you will be told about your application process in just a few minutes. If approved, the loan amount will reach in just a few hours.
In a nutshell
Getting a car loan has become very easy these days. With some of the best NBFCs as well as all the leading banks offering loans, on both new as well as used cars. It becomes very convenient for you to get a suitable loan at a quick pace. However, selecting the right type of loan with the right rate of interest is an important thing to do. Complete this step with care and you will surely end up with a suitable car loan with which you can achieve your dream of buying your favourite four-wheeler.