If you are planning to buy a car or looking for a loan to upgrade your existing vehicle, then fixed deposits can play an important role in getting a good deal.
Also, average car interest rate should be kept in mind which could be calculated by taking the help of expert companies.
In this article, you will be revealed how you can use this facility while applying for a car loan.
How to apply for a car loan against your FD?
The process of applying for a car loan against your fixed deposit is pretty straightforward. You will have to open an FD with the bank, and then apply for the auto loan. The bank will approve you based on their parameters, which include your income and credit score.
Once they approve your application, they will issue you a check. This check must be deposited within 24 hours at their designated branch and then it’s ready to use anywhere you like.
Basic features of a car loan against an FD
A car loan against an FD is a good way to get more money when you buy a car. This loan involves borrowing money from the bank and repaying it over time. It’s similar to any other kind of loan, but there are some important differences.
The first thing to know about loans against your fixed deposits is that they come with lower interest rates than personal loans or credit cards. That means fewer interest payments for you, which means more money for your car!
Another big benefit is that most banks allow you to borrow up to 80% of the car’s value. So this type of loan can be very useful if you want something expensive like an SUV or luxury sedan.
Benefits of availing car loan against FD
Its benefits are it allows you to reduce the interest rate. You are also able to lower your monthly installments as well as the total cost of ownership by opting for one.
This is because when you take a loan against an FD, the maximum amount that you can borrow from the bank is up to 75% of your net worth or annual income (whichever is lower).
The second benefit is that it will reduce the amount of money you have to pay back over time.
Attach necessary Documents
- Bank statement: To be able to apply for a car loan, you need to have an account with a bank. Your account must have been opened for at least 3 months and should contain a minimum balance of Rs. 50,000.
- ID proofs: The person applying for the loan must have valid identity proofs such as Aadhaar Card, Passport or Driving License.
- Address proof: This includes any utility bill issued by your service provider in your name which has been active for at least 6 months.
- Income proof: If someone else will benefit from this investment then an income
certificate will be required along with other supporting documents mentioned above so that they can avail benefits under Section 80C(1) clause 1(e).
According to Lantern by SoFi experts, “Auto loan borrowers are responsible for repaying their principal loan amount and any interest and fees charged over the life of the loan.”
You can use your FD as collateral to get a car loan at lower interest rates. A car loan is a business contract between the bank and the borrower in which both parties agree to certain terms so look for a reliable source to get the loan.
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