Points to Keep in Mind Before Taking a Vehicle Loan

• Calculate the On-Road Cost: Always budget for the total on-road price, which includes registration, road tax, and insurance, rather than just the ex-showroom price. This will prevent funding gaps at the time of purchase.
• Maximize Your Down Payment: While 100% financing is often available, paying at least 20% upfront reduces your loan amount. This leads to a lower interest burden and more manageable monthly EMIs.
• Choose the Right Tenure: Vehicle loans typically range from 1 to 7 years. While longer tenures offer smaller EMIs, shorter tenures help you pay off the debt faster and reduce the total interest paid.
• Compare Interest Rate Types: Decide between fixed and floating rates. Fixed rates provide certainty in repayments, whereas floating rates may drop if market conditions improve.
• Assess Depreciation vs. Loan Value: A vehicle's value drops the moment it leaves the showroom. Ensure your loan tenure isn't so long that you end up owing more than the car's resale value.
• Opt for Comprehensive Insurance: Lenders usually mandate insurance. It is wise to include a "Zero-Depreciation" cover to protect your investment fully in the event of an accident or total loss.
• Understand Hypothecation: Remember that the vehicle remains legally tied to the lender until the loan is closed. Ensure you obtain the NOC (No Objection Certificate) to remove the bank's name from your RC after your final payment.