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The car loan interest rate is the additional amount you have to pay on top of the principal amount borrowed when you finance a car purchase through a loan. It refers to the cost of borrowing money from a lender, expressed as a percentage of the loan amount.
The car loan interest rate heavily affects your monthly installments. There are primarily two types of rate of interests, fixed interest rate and variable interest rate. A fixed interest rate determines a constant interest rate throughout the loan term. Whereas, a variable interest rate refers to the interest rate that can change periodically based on market fluctuations.
Car Loan EMI Calculator to Calculate Car Loan Interest Rate
A car loan EMI calculator is used to calculate your car loan interest rate so that you can find the suitable option that is in your budget. It is a financial tool that helps borrowers estimate their monthly loan repayments. It includes the principal loan amount, interest rate, and loan tenure to provide you with an accurate figure for the monthly EMI. The information about the EMI amount that you will need to pay each month is crucial for budgeting purposes for the future. Research and compare car loan interest offered by different financial institutions to find the best deal for you. A car loan EMI calculator can help you very well in this process.
What are the Types of Car Loans?
The car loan is mainly divided into four types. Various types of car loans that you can apply to finance a car purchase are:
- New Car Loans- These loans offer a maximum repayment tenure stretched to 8 years. New car loans provide the purchase of a new car directly from the dealer of the company.
- Pre-owned Car Loans- You can make a purchase of pre-owned cars from a dealer or directly from the seller with pre-owned car loans. The maximum repayment period of pre-owned car loans can be stretched up to 5 years. Make sure to compare car loan interest rate to ensure you are getting the best possible deal.
- Loan Against Car- If you are in need of money urgently then you can avail of a secured loan against a car. The loan money can be used for any financial requirements that you may be facing. The repayment period for this loan is 5 years.
- Car Loan Top Up- In times of emergency, if you need money urgently and you already have an active car loan then you can take advantage of a car loan top-up.
What is the Eligibility of Applying for a Car Loan?
Some factors that lenders generally consider when someone wants to apply for a car loan can differ from lender to lender. The eligibility criteria for a car loan are:
- The minimum age of the borrower must be 18 years old to apply for a car loan. Some lenders may require you to have higher age requirements.
- Your ability to repay the loan depends on your income. The lenders usually require a stable source of income to determine your ability to make repayment of the loan.
- You must have a good credit score that demonstrates your creditworthiness and can also affect the car loan interest rate. A poor credit score may lead you to the disapproval of your car loan request.
- There are some document requirements that you have to fulfill in order to take a car loan at a lower interest rate. These documents include your address proof, identity proof, income, employment status, etc.
What are the Benefits of a Car Loan With a Low Interest Rate?
There are numerous benefits of a car loan with a low interest rate. Some of the main benefits of low car loan interest rate are:
- Individuals can purchase a car without a large upfront payment through a car loan. Hence, making it an affordable option for them.
- Car loans offer competitive interest rates that help car buyers to spread the cost over time. One of the most important benefits of making timely car loan payments is that it can improve your credit score in the long run.
- Car loans provide flexibility to borrowers with different tenure options to suit different budgets. To secure better terms, you can also have the option of refinancing.
- You can also avail of special deals and promotions by some lenders that can reduce the overall cost of owning a car, making car loans attractive to borrowers.
Conclusion
The car loan rate is the additional amount you have to pay on top of the principal amount borrowed when you finance a car purchase through a loan. There are mainly two types of car loan interest rate, fixed interest rate and variable interest rate. Car loans are of four types- new car loans, pre-owned car loans, loan against car, and car loan top up. The eligibility criteria to apply for a car loan vary from lender to lender. There are also numerous benefits of a car loan with a low interest rate.
