From being a luxury owned by the rich, cars have become a necessity even to the middle class of society. This dream of owning a car has become a reality with the availability of car loans. As there is no necessity to make the entire payment at the time of purchasing, owning a car has been made easier. Car loans make up for a great section of the loans selling in the market with a rise in demand for cars.

 

When applying for a car loan, the most important thing that one should take into consideration is the rate of interest. There are two kinds of rates while getting a car loan are the rack rate and the actual rate. The rack rate is an estimated rate of interest set by the lender that is about 12-14%. But with the adjustments made between the lender and seller for cars financed through loans the rate of interest is bound to come down which is the actual rate. This benefits the buyer as the benefit is enjoyed at a lower cost. Thus, loan seekers should always check for the actual rate of interest to get the best deal on a car loan.

 

The EMI for repaying the loan is calculated based on the duration for repayment. The greater theduration for repayment the lesser the EMI amount and vice versa. Car loans are normally fixed for aperiod of around 36 months or 3 years to a maximum of 84 months or 7 years. In case of situations where the EMI does goes beyond the percentage of income for the EMI, certain adjustments are made to make the facility available. Extending the duration of repayment to a certain extent can extending the duration of repayment to a certain extent can help to reduce the EMI and make the loan available.

 

 

 

   
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