100% Car Loan Explained: Drive Home Your Dream Car with Zero Down Payment

Buying a car in Indian households is still a dream, a significant financial decision. Whether they have the money or not, people usually rely on loans to get their dream car home. Traditionally, car loans require down payments, which means the buyer needs to pay a fraction of the car's upfront cost. However, some banks and financial institutions offer 100% car loan finance these days. In this article, we'll delve deeper into the details of 100% car loan finance. Is it worth considering? Before moving ahead make sure to join the 91Wheels WhatsApp community to never miss out on any automotive updates.

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What Is 100% Car Loan Finance?

A 100% car loan finance means the lender finances the entire cost of the car, covering either the ex-showroom price or the on-road price of that vehicle. These loans are for individuals who wish to get their dream car home right away but do not have the savings for a down payment but have a stable income for EMIs.

How does It work?

• Choose your car's loan provider and which model you want to buy.
• Research Banks, NBFCs and car dealerships that offer 100% loan finance.
• Compare various parameters such as interest rates, loan tenure, processing rates and eligibility criteria.
• Now, after applying, the lender will evaluate your profile on various factors: CIBIL Score, employment type, income stability, loan tenure etc.
• The lender will verify your documents and then the bank will disburse the full loan amount to the dealership.

What Are The Advantages?

A full car loan can be a big blessing for many who do not have money for the down payment. Here are some key points, how it can a boon:-

• No Upfront Cost: Unlike the regular car loan which demands you to pay a 10-30% down payment, this lets you buy the car without any initial payment. It can be ideal for people, who want to save, rather than spend in one go.
• Faster Car Ownership: you don't need to save money for months to pay for the down payment. If you want to buy it immediately, 100% helps.
• Suitable For Young Buyers: Many young professionals lack savings but have enough to pay for the EMIs. With a good credit score, you can go for this option.
• Better Options: Without a down payment, the buyer can opt for a higher model instead of settling for the lower variant that fits in the budget.

What Are The Disadvantages?

While everything sounds so great it is not the case usually, let's have a look at the disadvantages of it

• Higher Interest Rates: Since banks will lend more money in 100% loan finance, the interest will be higher. This will eventually add up to your repayment amount.
• Longer Tenure and Higher EMIs: A larger loan amount will lead to higher EMIs and to decrease the EMI burden people opt for longer tenure.
• Strict Eligibility Criteria: Since banks paying the full amount tend to have a higher risk, they will have strict eligibility criteria. So, if your profile is weak, there might be a chance that your loan request may get rejected.
• Additional Costs: You may need to pay some additional charges that might not be needed in the standard loan.

Should You Take a 100% Car Loan?

A 100% car loan can be a game changer for you but the question arises: Is it the right choice for you? If you urgently need a car and lack savings for a down payment, you have a stable income and can pay the EMIs easily. It might be a smart move for you. However, if you can save for a down payment in a few months, and want to avoid higher interest rates and extra costs, then its best to reconsider and go for a standard loan.

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