If you intend to buy a car there are lots of options available with launch of new car brands in the Indian market. Going for the right kind of car loan is very important in the case you decide to buy a car on finance. There are lots of factors that play their roles when you decide about a certain car loan. Normally it is better to peg your car loan around 10-15 % of your net income.

Deciding to buy a new car or an old one depends on various factors. A lot of people go for a used car when they go for their first purchase. On the other hand, majority of people will prefer a new car. For people who keep changing their car frequently it is preferable to buy an old one as they may change even a new car soon. On the other hand, anyone with a habit of sticking to one car for a long time should purchase a new one as it will give them more satisfaction.

When going for buying a car it is recommenced to have some factors clear in mind, like the budget for purchasing the car, monthly budget for the car and the period you intend to use the car. Where you are going to use the vehicle (town or village) is another factor that can influence your decision in buying a car

Note that before buying an old car it is advisable to take the advice of a mechanic about the various performance criteria like lyres, suspension and cooling of the car

Getting a car loan has become easier now a days. There is a healthy completion in the market among banks to offer finance options to clients and earn interest on them.

Taking car loan from some financial institution is the easiest and most used way of financing your car. In this case the car you buy is actually a possession of the lending institution. The formal term used is ‘hypothecation clause’, which means that though you own the car, the lending institution is using the car as a security against the loan taken by you. Once you have cleared all the dues, this clause is removed from the agreement. It is notable that a self-employed person can get tax relief on the interest paid for the car loan.

Another finance option for purchasing a car is hire purchase. In this system, the lender buys the car on your behalf and sells it to you on hire purchase. In fact, you hire the car from the lender and own it once you have settled the dues.

Lease is another option for financing a car. If you go for this option, the car is owned by the financier and leased out to you for a monthly installment, which includes both principal and interest payment. When the lease period ends, you become the owner of the car and the vehicle is formally transferred in your name

You need to do all the necessary paperwork when you are going to buy a car. The paperwork includes dealing with power of attorney that allows the dealer to go to the RTO and register the vehicle and transfer of title in the case you are trading in a car. While signing the legal documents take care and do not hesitate to check the facts in case you have any doubts.

You should know that when a bank offers you a car loan it charges a processing fee, which is a certain percentage of the total loan amount. The fee amount may vary from bank to bank and it is paid upfront. This fee is taken from the amount of money you get as loan.

You should take care in choosing a bank and should check its fee percentage as it can have a big impact on the final loan amount you get and the cost you have to bear.

While going for a car loan, monthly installment also known as Equated Monthly Installment (EMI) is something that counts a lot. You should be careful about this amount to be repaid to the bank. The rate of interest and the amount of EMI differ from bank to bank. So, take care to go for the bank that offers the best deal.

There are various methods to calculate the EMI to be repaid to the bank that provided you the car loan. Some banks calculate the EMI based on the day by day basis. In this method, the principal is reduced every day as if you were making repayment of the principal on a daily basis. On the other hand some banks use the monthly basis method in which the interest reduces every month when you pay your EMI. Some banks use the quarterly method, in which the principal reduces every three months. In the yearly method the principal is reduced at the end of each year.

The aforementioned methods of calculating the EMI amount is used by banks. You should check before going for any car loan and should be aware about the method employed by the bank.

Some banks charge a certain penalty in the case you decide to prepay the loan amount. Prepayment may happen in the case your finances improve and you decide to pay back all the outstanding loan amount. This results in the bank losing the interest amount that it could have earned. So, most of banks charge a certain prepayment penalty. They want to discourage you from prepaying. The amount of the penalty may differ from bank to bank. Check for the prepayment charge details in the case you are going for a car loan. It is advisable to go for a bank that charges no amount as penalty for prepayment. In the case all banks charge you should better go for the bank that charges the minimum penalty.

The home buying process can appear complex, but if you take things step-by-step and you know how to decide the right home loan, you will soon be holding the keys to your own home!

Ten steps to buying a home

(1). Learn about home buying programs

(2). Shop for a home. Choose a real estate agent, Wish list - what features do you want, Home-shopping checklist - take this list with you when comparing homes.

(3). Make an offer. Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.

(4). Figure out how much you can afford. What you can afford depends on your income, credit rating, current journal expenses, down payment and the interest rate. The calculators can help, but it is best to visit a lender to find out for sure. A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that down payment!

(5). Know your rights

(6). Shop for a loan. Save money by doing your homework. Talk to several lenders, compare costs and interest rates, in addition to negotiate to get a better deal. Consider getting pre-approved for a loan.

(7). Sign papers. You’re finally ready to go to “settlement” or “closing.” Be sure to read everything before you sign!

(8). The House is yours now. Have Puja or hawan.

(9). Get a home examination. Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.

(10). Shop for homeowners insurance Lenders require that you have homeowners insurance. Be sure to shop around.

Terms used in Housing Finance

(1). Prepayment Penalties: When loan is paid back before the agreed term of the loan, then banks/ institution charge penalty for the prepayment

(2). Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period, after it is processed and sanctioned

(3). Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges.

(4). EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of interest and the main

(5). Floating Rate of interest: Rate of interest which varies with the market lending rate. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up

(6). Monthly Reducing balance: In this system interest reduces monthly with repayment of Principal amount

(7). Annual Reducing Balance: In this system principal is reduced annually at the end of the year so you end up paying interest even for the portion of principal you have actually paid back

(8). Fixed rate of interest: Rate of interest remains unchanged throughout the period of the loan

(9). processing charge: It’s a fee payable to the lender on applying for the loan

For most Indians, buying a car is a dream that comes second only to the vision of owning a house. This vision has become real for many Indians with the arrival of easy financing for car buy.

The decision to buy a car is, very often, prodded by the promise of easy financing that car dealers advertise. “Do not negotiation, you can now own a Toyota Corolla for as little as Rs 10,000/ month” says an advertisement, egging on all with monthly spare money of Rs 10,000 to own the dream Toyota. The mathematics of this foxes the prospective buyer. Is it real?

You decide to check with the dealer. You find the offer is real, but the initial lump sum payment would be big. OK, you say to yourself. I’ll manage that. But what is the interest rate for the loan? The dealer tells you it is 11% and you wonder how come it is cheaper than a home loan? You prod further and discover that this is actually in lieu of the cash discount you could otherwise have got. You are no longer sure whether to believe him or not. You are not to blame. Car finance can become complex because of the financing deal between the car dealer and the bank.

It will assist you discuss better if you follow the process below:

(1). Ask around for preliminary quotes for the given loan amount for the given car. Freeze on the lowest EMIs that are offered.

(2). Now, negotiate on the processing fees. Most times, the processing fees can be waived.

(3). Finalize your decision on the car you want to buy. The interest rates vary from car to car; so, what is available on one car may not be available on another car

(4). Fix the amount of vehicle loan you need. Suppose the car costs

Rs 8 lakh on the road and if you are ready to make a down payment of Rs 2 lakh, then freeze your loan supplies at Rs 6 lakh. Interest rates that you get also depend on the loan amount.

(5). Once you find that the cash discount limit has been reached, you can try for a small freebie on car accessories such as car mats, boot mats etc.

(6). Remember to claim your no-claim bonus on the insurance policy for the new car if you have a claim-free record on your existing old car.

(7). Then, start negotiating for cash discounts that can be adjusted against your down payment. The DSAs/dealers will offer to reduce the EMIs, but resist the temptation and insist on a cash discount. Also, the dealer/DSA will present accessories in lieu of cash discount; again, resist and insist on cash discount.

Several banks give loans to cater to business requirements. Banks have laid out a number of products specially catering to SSI (small-scale industries) and Small Business Borrowers.

Business loans are available to firms and corporations to get together their operating expenses; to finance for capital expenditure / acquisition of fixed assets towards starting / expanding a business or industrial unit; and to swap existing high cost debt from other bank / financial institution etc.

Apart from providing financial support bank can also issue letters of credit or can give a promise on behalf of the customer to the suppliers, government departments for the procurement of goods and services on credit.

Maximum amount of business loan that can be authorized varies from bank to bank. Generally, the maximum loan amount is Rs. 25 lakhs and maximum loan term is 5 years.

Personal loans help you to take care of your instant requirements without much of a hassle. The most attractive feature of the personal loan is that you do not have to give any type of security to benefit this loan. No Security, Collateral or Guarantors are required to benefit personal loans. Also, no questions regarding the end use of the loan are asked.

The maximum amount of personal loan for which you are eligible depends upon your net salary take home. Loans are repayable in equal monthly installments or EMIs. Loan term varies from 1 to 5 years. Since personal loans do not require any security or hypothecation of assets, the rate of interest charged by them is higher compared to any other secured loans.