Car loans that describe the money that offered by an individual or an institute for the person needs money for buying a new car. The most common method in India to buy a car is borrowing money then they’ll pay later that money in instalment. More than 50% of cars are bought in this way in India.
There are two methods in car loans they are:
- Direct method
- Indirect method
Direct method: The direct loan is a method the person who wants money they’ll arrange or borrow money from the lenders. They need to pay the instalment directly to the person who lends money to buy the car.
Indirect method: In this method the money can be arranged by the dealers those who sale the car to us. In this method we need to pay the money to the dealers. It is not a legal way to get funds because if a dealer lends the money to buy a car, then a contract sign between buyer and seller that retail instalment sales contract so technically it’s not considered as a loan.
- Compared to cash loan the car loans are considered as low costs we need to pay less instalments compared to other loans.
- It also reduces the risk percentage in the cash transfers.
- Also, everything is based on the worth of the person that decides the amount that he’ll get from them.
- The amount is paid with in 10 years that is also a great plus that makes the instalment amount less in every month.
- Even we can repay the amount as liabilities that are based on our choice to repay the amount or instalment in different ways.
- The car loan is sanctioned very easily compared to other loans.
- Once we get loan from the bank then until the loan completes the documents of the car were not with us, it is only with the bank. Even we need to sell the car but without the interfere of the bank.
- If we get loan from the bank then the insurance is necessary because if the car is damaged or stolen by some one then the insurance company will pay the bank. So, the insurance is necessary.
- In some platforms they’ll provide loans with less formality but in the bank, there are lot of formalities are there. We need to produce a lot of documents to them.