Don’t Restrict Your Dream: Come to Us for Car Financing
At time, we decide to buy a car-new or used-but we find that our saving which can be spent on buying the car is insignificant compared to the total cost of the car. In such case, we pay that nominal amount as the down payment and the balance amount is paid by a lender and we pay the lender certain amount every month for certain duration. This process of buying a car is called buying car through financing.
How car financing is advantageous for a prospective buyer:
To understand this advantage, let us first understand the actual process associated with car financing.
Car Financing: We have two options of buying a car. First, you pay the full amount and you purchase the car from any auto showroom. The second, you pay a certain of total cost of the car as down payment and borrow the balance amount from any car financing company. The lender usually pays the loan amount to the seller of the car directly. The seller gets the total amount and you pay the loan amount and an interest charged over the loan amount to the car financing company. You pay the car financing company a certain amount every month over a period of mutually decided number of months. This monthly payment usually includes certain amount of principal and interest. The interest charged over the loan amount is the income of the car financing company.
Now you see the advantage of car financing. Normally, cost of car is into millions. However, if you are in such a condition that you can’t pay the total cost of the car upfront but you can pay the whole amount if it is divided into smaller sum which can be paid every month for a certain number of months. In this scenario, you have the same purchasing power but the only difference is that you can’t pay the whole amount together. In this situation, car-financing option comes into play, through which you purchase the car even without paying the whole amount together.
Who are Eligible for Car Financing:
Anybody having a steady source of income-self employed or in service- is eligible to get car financing. While applying for car financing, you need to provide evidence of the following:
- Salary Slip or income statement
- Residence proof
- Identification Proof
- Your bank statement showing credit of your monthly salary.(However, there should not be reflection of dishonour of any cheque).
- If you are employed, a proof that you have been working for more than a year. This condition varies from lender to lender. It is always preferred if you have been working with your present employer atleast for last six months.
Loan Amount & Interest:
Therefore, to conclude, if you intend to buy a car but you can’t pay the whole amount together-don’t suppress your desire of having a car of your own-you can opt for car financing, which is actually made for such clients.
The loan amount depends upon your income level. The more income you have, the more amount of financing you will get. It also depends on your credit record. The better credit score you have, the more amount you will get. The maximum loan amount also varies from lender to lender. The rate of interest to be charged by the lender, called APR, also depends upon your credit history. Your loan will be placed in los risk category if you have good credit score, which will be resulted in low rate of interest. Conversely, if you have bad credit score, you will be placed in high risk category. The high risk is usually compensated by the lenders by charging higher interest rate.