What does an auto loan refer to?

When the vehicle is used as collateral security, it is known as an auto loan. These are the secured loans to buy a new, used or commercial vehicle. The approval of this loan is more accessible than other loans. Don’t confuse an auto loan, a personal loan, or any other type of loan. An auto loan is used to purchase a vehicle only, while personal loans can be used for so many purposes.

Two-wheeler loans and commercial vehicle loans are the two types of auto loans.

A commercial vehicle loan is always taken for the purchase of those vehicles that are used commercially.

A two-wheeler loan is taken for purchasing two-wheeler vehicles, and it also differs from an auto loan in some aspects like repayment tenure, loan amount, interest rates, etc.

Things you would need for taking an auto loan?

The documents you need while taking an auto loan may differ from lender to lender. Still, the essential documents every lender asks for and will undoubtedly need are your ID proof, address proof, job description, and salary and bank statement.

Auto loan

There are some documents and criteria lenders have to approve:

  • CIBIL Score and credit profile of the borrower.
  • Employment and income of the borrower.
  • Loan repayment status.
  • Any EMI obligations.

Things to consider before taking an auto loan

  • Compare the loan plans from different banks: choose the best suitable ones for the loan and check their interest rates. Don’t choose the first bank offering you an auto loan. Always look for options.
  • Your CIBIL score: before applying for a loan, check your CIBIL (Credit information bureau India limited) score to find out if you can take a loan easily or not.
  • Select the car considering your financial condition: if your career is at its start, don’t go for expensive cars. Select the cars keeping in mind what your financial condition is.
  • Calculate the EMI: calculate the EMI and tenure before taking a loan.
  • Carefully read all terms and conditions: everyone must read them carefully and understand them. It will help you in further steps.

To sum up:

Before opting for an auto loan, you should be clear about what it is and why to opt for it. So that next time you plan to buy a car, consider an auto loan. Don’t hesitate while taking an auto loan. It offers you all the benefits you are looking for in a loan. The above-mentioned points you should keep in mind, and now is the time to apply for an auto loan.