Applying for a luxury car loan? Here’s what you need to keep in mind
Cars are indispensable in the world today. They are no longer just a status symbol, but a necessity for travelling from one place to another. Whether you want to be on time for a business meeting or take a road trip with your family, owning a car comes in handy. Auto manufacturers around the world have designed and built different models of cars to satisfy the varying needs of car consumers around the world. From sports utility vehicles and multi-utility vehicles to passenger cars and commercial vehicles, there are numerous types of cars available on the market.
What makes a car a luxury vehicle? It has to be made of higher-quality materials and equipment, give better performance and comfort, and it must be developed using advanced design and technology. A luxury car with a heavy price tag can boost the image of the brand or the auto manufacturing company. Who are these luxury cars targeted at? Answer: car enthusiasts with deep pockets from around the world. There is a small percentage of consumers who look for glamour, speed, and flamboyance over practicality. This niche group doesn’t mind investing huge sums of money in one of the fastest or the finest cars available on the market.
Car loan for luxury cars
How does one afford a luxury car of their choice? Banks, Non-Banking Financial Companies (NBFC) and other lending institutions offer easy access to funding in the form of auto loans. In India, any salaried employee or self-employed person with a steady income can apply for a car loan. Banks offer car loans for new and pre-owned vehicles at competitive interest rates for a loan tenure of 1 to 7 years. You can check your car loan eligibility online before applying for one. Compare car loans online on a third-party comparison website to get better deals. Calculate the total cost of your car loan using the online car loan EMI calculator for instant and accurate results.
Things to keep in mind when applying for luxury car financing
India is seeing a steady economic boost which has increased the buying power of consumers. Thus, the desire to better one’s lifestyle is inevitable and owning a luxury car is part of that desire. Here are 5 important things to consider before applying for a luxury car loan:
● Interest rate: Compare various car loan offers across top banks and choose the lowest interest rate car loan. Opt for a floating interest rate car loan for a short loan tenure and a fixed interest rate car loan for a long tenure.
● Loan tenure: Choose a shorter loan tenure to pay off the car loan at the earliest. A shorter loan tenure means higher EMI payments but a longer loan tenure means higher interest payment.
● Processing fee: A percentage of the principal loan amount is charged as processing fee by banks. If you do enough research you may come across banks that offer processing fee waiver. Thus, saving you from paying a significant sum of money at the time of obtaining the loan.
● Prepayment charges: After 12 EMI payments, customers can prepay the outstanding loan amount. However, banks charge a prepayment fee for repaying a part or whole of the loan before the end of the loan tenure.
● Down payment: Always volunteer to make significant down payment on the total price of the car. A higher down payment means lower interest and EMI payments. Ensure your car loan EMI payment doesn’t exceed 50% of your salary.
Tips to obtain auto financing for luxury cars
Those who are looking to purchase a high-end car mustn’t shy away from doing adequate research before applying for an auto loan. Take a look at some helpful tips to get better car loan deals:
● Go for a model that comes with financing options like low interest rate or rebate.
● Volunteer to pay high down payment so that the cost of your car loan will be lower.
● Make prior arrangements for auto financing before visiting a car showroom or dealership.
● Banks offer better deals for existing customers. Choose a car loan with short loan tenure to avoid paying more in interest.
● Purchasing a pre-owned luxury car is an alternative to spending huge sums of money on a new car.
●Lease a luxury car instead of buying one if you are the type of person who likes to change their car every couple of years. Lease payment is comparatively lower.
However, it helps to remember that lease is an option only if you don’t put more than 15,000 miles in your luxury car or else you may end up paying high service charges and incur other fees.
Perks of owning a luxury car
Owning a luxury car is not only a status symbol but also a measure of success for most individuals. Cruising down the highway in a sleek BMW, Mercedes, or Ferrari is bound to garner attention. Nowadays, owning a luxury car is not limited to the super-wealthy; any individual with a steady income and suitable repayment capacity can obtain funding to purchase one of the luxury car models on the Indian market. What’s more? Car enthusiasts can celebrate the leverage of import duty in India and add more luxury cars to their impressive collections.
While extolling the benefits of owning a luxury car, let’s not forget the challenges faced by a luxury car owner. Owning a luxury car is a lot of responsibility. For instance, the car insurance premium for luxury vehicles is higher in comparison to standard SUVs and passenger cars. An adventure in your luxury car on Indian roads requires careful planning so as to avoid vehicular accidents. Of course, a personal accident cover or health insurance policy will cover your medical expenses but what about the damages to your car? The cost of maintaining and repairing luxury cars is exorbitant seeing as most spare parts have to be imported. Given the road conditions in India, luxury cars can’t be taken out for a drive on a whim. Therefore, handle the ownership of your luxury car responsibly.