Broadly, there 4 ways of applying for a home loan or car loan in India:
- You can directly walk into the bank where you have an account and seek details of a home loan or car loan. The loan officer will be more than happy to share details of the rates of interest and the tenure of the loans as well as the various schemes available.
- The second option is to either use the phone banking method or the ATM enquiry or the online enquiry method for seeking a home loan or a car loan. Here, you just leave a lead and the officer in charge will get back to you and help you to complete the process.
- The third and the now popular method is to go through the loan aggregators which give you information various loans from different banks and help you to compare and choose the best option. They are only initiated by the portal and then the banks take over.
- The last and the most popular method of getting a loan are to go through the vendor financing. Normally, property developers tie up with home loan providers and car showrooms tie up with car financers and this is on the spot financing based on some basic eligibility criteria.
What you need to know about a home loan or car loan?
There are some key points that you must know when you are taking a car loan or a home loan from a bank or the financer.
- No lender will give you 100 % financing. You will be required to bring in 10-15 % of the cost of the asset as your own margin.
- The tenure for a home loan can go up to 25 years while in case of car loans the tenure can go up to a maximum of 7 years, with 5 years being the most popular.
- Loans can be either fixed rate loans or variable rate loans. In variable rate loans, the EMI does not change but the tenure of the loan is adjusted accordingly.
- Sanction of the loan letter is based on your CIBIL score and your income levels as well as your current debt. Keep a CIBIL score of at least 750 for easy loan sanction.
- Most banks will fund first hand and second hand purchase of both the assets i.e. home and cars, although the margins and other terms may differ.
- SBI offers car loans at around 9.65 % which is subject to change. They fund up to 85 % of the on-road price of the car including insurance and registration. There are no processing fees in case of SBI car loans and there are no foreclosure charges for early closure of loans.
- Axis Bank offers car loans in the range of 9.5 % to 15 %and the tenure of the car loan is subjected to a maximum limit of 7 years. There is small processing fee of around Rs.5500 and there are also foreclosure charges if closed within a year. It does allow partial foreclosure.
- HDFC Bank also offers car loans at the rate of 11.5 % to 13.75 %. The one big difference here is that the bank funds up to 100 % of the ex showroom price. That means you don 't need to worry about bringing in any margin. Normally, the car is hypothecated to the financer and the hypothecation is mentioned in the RC book of the car. HDFC Bank charges very steep penalty for foreclosure of loans before 3 years.
- One of the largest and most popular car financers is ICICI Bank. The rates of interest are also lower at around 10.75 % to 12.75 % per annum. Like in case of HDFC bank, ICICI also finances up to 100 % of the ex showroom price of the car. There is a small processing fee for the loan up to Rs.5,000 and there are steep penalties for early closure of the car loan.