When you plan on buying any product in the market these days, it's extremely easy. Just like you enter an appliances store, make up your mind on what you want and the shopkeeper will give you a lots of financial option to avail the product. The same goes with cars, buying a car is one of the greatest feeling ever. You need to do a lot of research and then shortlist on which car would you like to buy.
After shortlisting the car make, you will have to see the car loan options available in the market. Check their processing charges, interest rates, etc. Coming to the interest rate part, HDFC car loan interest rate is the best you can get in the market. You decide on everything and start dreaming on how you would customize your car and suddenly you realize, what about your credit score?
Recently you have skipped a couple of your credit card payments and are certain that your credit score will be on the lower side, what would you do? Do you skip your plan to get the car? Do you plan to make a huge down payment? Is it worth making a huge down payment?
The correct answer here is, you have a lot of options available when it comes to car loans as compared to other loans. The reason being, a car loan is kind a secured loan. Your car is collateral to the bank until you do not repay your loan. Various banks and Non-banking financial companies do not have a problem financing your car loan. The main question here is, who would you choose for financing the car loan?
Let us understand which is better, a bank or a NBFC,
When you apply for car loan in a bank, you will go through a process of stringent verification process. The banks are pretty adamant, when it comes to processing any loan. The loan process may take weeks for sanction as they have a huge checklist to tick before they can process their loan. If by any chance, you credit score is low, you are then processed a loan with high processing charges and higher interest rates compared to other market standards. There are some pros as well, when you take a loan from the bank like the banks give you overdraft facility upfront if your payment patterns are great. Also, your bank may have a pre-approved loan ready for you towards your account, which can get you a loan in no time at all.
When you dive into the car loan market you will find there are many NBFC options for you who can provide you loan. Some car brands have their own financial institutes who provide car loans for their own brand in a much cheaper interest rate. There are a lot of benefits of availing a vehicle loan from an NBFC rather than a bank. Even if you have a low cibil score, the NBFCs are glad to finance your car. If you are specifically looking for a used car, the best suggestion would be to avail a loan from any NBFC. The processing time to disburse a loan is relatively faster than various banks. The interest rates and the processing fees are relatively cheaper than the banks. The NBFCs have a competitive approach when it comes to wooing a customer and getting them to buy their financial product. As compared to banks, the NBFCs have less rules and regulations when it comes to processing loans giving them an added advantage.
The bottom line is, both of them have their pros and cons.