July 01, 2020
You want to buy a car, but are worried that your current salary may not permit you to take a car loan. Or you are looking to get back to your workplace after the Covid-19 induced lockdown, but are wary of using public transport. While you would like to buy a car for safer travel, you are unsure if you should take a car loan now and commit to repaying the EMIs.
Owning a vehicle gives you the independence to travel at your convenience, provides safety and peace of mind in the current situation, which calls for social distancing. And it is possible to enjoy the benefits of your private vehicle without undue strain on your budget. Let us see how.
Axis Bank Step Up Car Loan: A Step-Up Payment loan works on the theory that an individual’s income increases every year, and, therefore, his or her repaying capacity also increases. This loan allows borrowers to start with a lower EMI (equated monthly instalment). The EMI increases by 10% every year. The loan covers 80% of the vehicle’s on-road cost, and the rest can be repaid over the next seven years.
How does it work in real life? Here is an illustration. Let’s say you decide to buy a car with an on-road price of Rs. 6.57 lakh. Axis Bank will fund 80% of this cost, approximately Rs. 5.25 lakh.
As you can see, with an Axis Bank Step-Up Auto Loan, EMIs are affordable enough for you to buy your vehicle and your income increases will ensure that you can meet your rising EMIs every year.
Axis Bank Balloon Car Loan: An Axis Bank Balloon Payment Auto Loan has a tenure of up to five years or 60 months. The loan is designed in such a way that you pay a subsequently lower EMI up till the last instalment, where you pay 25% of the loan amount.On a loan amount of Rs. 5.25 lakh for 5 years, your EMIs from 1- 59th month will be Rs. 9,513. The last EMI will be Rs. 1.31 lakh.In terms of a monthly outgo, Axis Bank has designed these products to be at least 30% cheaper than a plain vanilla auto loan.
3 Month Low EMI Car Loan: A loan product where the EMI is low for the first three months and then it would increase. This loan is for a tenure of up to five years. This is suitable if you are facing uncertainity on financials in short term. You have the comfort of knowing that your EMI outgo is lower in the initial period of the loan, and hence, you can allocate the money that you save towards other more immediate needs in the short term.
For a loan amount of Rs. 5.25 Lakh over 3 years, you’d end up paying an EMI of Rs 5,245/- for the first 3 months and EMI of Rs. 18,034 from the 4th to 36th month.Another point that works in favour of these loans is that you also have an option to resell the vehicle and pay the outstanding loan to the financer. Thanks to the lower EMIs in the initial period, your equity in the loan would be lower, thereby making the decision to sell, if required, easier.
So, don’t hesitate, as the economy reopens, instead of taking the risk of exposure by using public transport, buy a new car using these affordable EMI loans.
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