Apart from home loans, car loan have proved to be the next biggest source of income for lending organizations. Banking as well as non-banking organizations are busy creating new products that can lure-in more and more number of buyers and increase their profit margins. Whether you are buying a used car or a new car, loan options are available for each one. The practice has compelled people to look for options in several other aspects related to loans. Loan schemes today not only include options for payment but also for repayment of loan. You may choose repayment options in car loans as per your choice. There are many who still don’t know anything about this. We have compiled a list of major car loan repayment options that are based upon various degrees of convenience seeked by various customers.
-
Regular Car Loan EMI: One of the most common types of repayment options in car loan that is accepted and offered by each lender. Under this method, a fixed car loan interest rate is decided and then the total amount (Principle +Interest) is divided in terms of monthly installments. Interest rates are lowest for this mode of repayment.
-
Step-up EMI: Under this method, the amount of car loan EMI gradually increases as time passes by. The interest charged for this method is slightly higher than the previous repayment option.
-
Step-down EMI: the complete reverse of step-up EMI options, here the amount of EMIs gradually recedes with progression of time. The total cost of this car loan might be less as the principle amount is paid back pretty soon.
-
Balloon EMI: Under this method, there is a provision that around 20 per cent of total loan amount will be repaid at the end of loan tenure. The interest rate charged for this one is way higher than the above mentioned options. The USP of this option is lesser burden over the borrower in initial stage.
-
Special Tie-up: Also known as the ‘super saver tie up’ form of repayment option for car loan, this one works completely in favor of borrower. The arrangement works in a way that whenever the borrower has extra money in his or her account, it is used for repayment of loan.
-
Lease And Refinancing: The most rarely used option under which the borrower repays the lender an EMI equivalent to lease amount of that vehicle. At the end of loan period, the borrower gets an option for paying the present day value of car.
