Every one of us dreams of buying a car and a good house at least once in our lifetime. However, many people can’t reach their dreams due to financial distress. The same situation is prevailing across the globe today due to COVID-19 pandemic. Many people have lost their jobs, and several others are dealing with the stress of pay cuts. Even after three months of COVID-19 outbreak in our country, there is still uncertainty as to when everything will be back to normal in the future. Financial stress in India is also taking a toll on many people, including the ones who wanted to achieve their dream of owning a new car or a house. Since travel in public transport has become unsafe due to the fear of contracting COVID-19 virus, many are considering buying a new vehicle solely for safety purposes. While some can finance their car entirely through cash payment, not everybody has such a luxury. Thus a Car loan becomes their best option during such times.
While purchasing a new car during the COVID-19 crisis, you should consider financing it through a car loan as it offers many merits. Most importantly, a car loan will give you the advantage of having a new car first and paying for it subsequently with monthly payments.
1. Take New Car Home with Monthly Instalments
A car loan offers an advantage of buying a new vehicle on monthly instalments, also known as EMI (Equated Monthly Instalment). With this facility, you don’t have to pay the entire cost of buying a new car. Monthly instalment through a car loan also reduces an immediate financial burden, which you can repay over a set tenure.
2. Lower Rate of Interest with Good CIBIL/Credit Score
CIBIL/Credit score is a crucial part for taking a car loan as it determines your rate of interest, which you must pay along with principal amount through EMIs. Higher the CIBIL score, lower the rate of interest. A credit or CIBIL score of 750 and above is capable of attracting a lower rate of interest, which is not possible otherwise. You can also finance with 100% loan amount on the ex-showroom price of your car, which is also the quickest method. However, you should only consider taking a 100% loan if you cannot make a down payment under any circumstances as it attracts a higher rate of interest.
3. No Collateral Required
Usually, no collateral is required for a car loan. Your bank will look at your current financial status, credit or loan repayment history, and CIBIL scores. These three things are crucial in deciding your loan amount and rate of interest as no collateral is required for taking a car loan. Make sure you have maintained all these records satisfactorily to avoid a higher rate of interest or reject your car loan application in some cases.
4. Flexibility to Choose Car Loan Tenure
Most banks offer a flexible car loan tenure if they find your financial health up to the mark. You can choose as long as an 8-year tenure while buying a new car. The tenure also decides the interest rate and total interest amount for a year. Use an online EMI calculator to know all these details beforehand and determine your further steps.
Financing a New Car via Loan During COVID-19
Financing a new car during COVID-19 is a matter of concern for everyone due to the fluctuating economic situation in India. On one side travel safety has become a concern while on the other financing a new car has become crucial. Car loan acts as a saviour in such cases. It is essential to take your car loan from reputable banks like Axis bank that offer pre-approved car loans and lower interest rates. You can also take a 100% car loan for the on-road price of your newly bought vehicle with other benefits.
Stay safe and travel only when necessary.