The dream of owning a car is something everyone has. However, most people are disappointed by the huge investment required for the same. But in recent times, the scenario of buying cars in India has undergone a total change with numerous institutions of car financing available for giving you the requisite finance for buying your dream vehicle. However, inadequate awareness about this market often creates problems for the buyers as they end up paying higher interest rates. Though there is an availability of many private and public financing institutions, lack of awareness and knowledge often lead to the buyers paying much higher amounts. The article aims to guide you on some critical aspects that will come in handy when you plan to get your car financed.
- You need to personally approach the automobile finance providing institutions; it is always preferable to go to those financial institutions that have been certified by RBI. Public sector banks like SBI, Punjab National Bank as well as Private Banks like HDFC, ICICI and the likes offer auto financing at easy to pay installments.
- You need to shortlist that bank, which will offer you the most finance at lower interest rates. Generally, interest rates offered by government banks are lesser than the private ones. Be sure to check on additional charges that might be levied. This could include approval and filing charges, which differ from bank to bank, but it is normally in the range of Rs.6,000 to Rs.7,000 approx.
- Though government banks have a policy of fixed interest rates, the same can be negotiated for in private banks.
- Be careful in choosing the type of interest rates – there are two “Floating” and “Fixed”. Floating rate initially looks appealing as it is kept at values below Fixed Rates, but it is subject to fluctuation in the market and carries the risk of increasing in the future, if so decreed by RBI. Fixed rates however remain constant irrespective of fluctuations in RBI rates.