Auto loan- as the term suggests that it is a personal loan which an individual seeks for buying a car. When an individual approaches for an auto loan, then he looks for a wide range of benefits such as loans with low interest rates, instant loan process, simplistic process, less documentation procedures and many other needs.
One of the key features which the borrower seeks in an auto loan is low interest rates. Low interest rate ensures less monthly payment and thus lower costs. Now-a days in the hustle and bustle lifestyle many institutions offer online applications. Auto loans are available for various needs such as loans for new vehicles, used vehicles, refinancing as well as for lease buyout.
Interest rates are subject to change with the type of loan one opts for and the duration for which one needs the loan. This theory works on a simple proportional scenario. If the loan is for a longer duration then the interest rates are bound to be higher and vice-versa. Consider the following table-
|
Duration |
Interest Rate |
|
36 months for new |
6.43% |
|
48 month for new |
6.56% |
|
60 month for new |
6.59% |
|
36 month for used |
6.98% |
These figures are subject to change as the processing fees, third party (if any) commission etc. The auto loans are classified in two categories- secured and unsecured form. Secured loans require collateral against the loan amount. Hence, the interest rates are lower in this case so as to attract the customers. In this case the lender secures the papers of his car itself. This gives the bank a sense of security and if in any case the borrower fails to repay the car is there for the taking for banks. The rate of interest in this case is around 5-8%.
On the other hand, in case of unsecured loans one doesn’t need to file any security or collateral. These loans do not involve any credit checks before applying for the loan. Hence, the rate of interest in this case can go as high as 8-12%. As mentioned earlier the entire process now is online. This involves online filling of application form, then the authorities examine the details and if everything is satisfactory the money is transferred to the borrowers’ bank account and then the borrower can start paying the installments.
The entire procedure now-a-days is as simple as 1-2-3.
