Automobile Loans Types
I am very happy to provide information on Loan Schemes. First of all I will explain Automobile or Vehicle or Car Loan Schemes and Loan Types, Details of which are mentioned below, we are explaining some of the popular loan schemes. Select a scheme that suits you best.
Security Deposit Scheme:
Under this scheme you are required to deposit a specified sum as security deposit against the amount provided as the loan. This security deposit is refundable on completion of the full period of the loan. You will receive interest on the deposit, which in most cases is lower than that charged to you on the loan amount. The EMI under this scheme is higher than the EMIs under the above two schemes. The security deposit ranging from 10-30% of the total is returned after the loan period. The deposit also earns a simple or compound interest, the tenure lasting for two to five years.
Lease Financing Purchase:
Lease is a contract between the owner of an asset (the Lessor) and its user (the Lessee) for the hire of that asset. The ownership rests with the lessor while the right to use the asset (car) is given to the lessee for an agreed period of time in return for periodic rental payments by the lessee to the lessor. Lease agreements are offered by NBFC's and are mostly availed by Corporates looking at it mainly from tax saving angle.
Hire Purchase Scheme:
This is an agreement under which the car is let on hire and under which the hirer has an option to purchase the car in accordance with the terms of the agreement. Hire Purchase agreement is mostly offered by Non Banking Finance Companies. Broadly this option works similar to the loan option. NBFCs usually charge an amount as low as One Rupee, called Option money, on payment of which the car passes on to the hirer. The NBFC's have taken to this option, as they are not encouraged to give loans, which is a Banks privilege.
Margin Money Scheme: Under this scheme, you are required to pay margin money of at least 10% of the total loan amount, along with one EMI. The balance amount is paid through post-dated cheques, which are issued for the balance EMI's covering the remaining period. With a repayment term of one to five years (in some cases seven), the Margin Money Scheme is the most sought after. One of the major advantages of this scheme is that it has lowest EMI to be paid, compared to other schemes for the same amount of loan.
Advance Equated Monthly Installment Scheme: This scheme offers 100% loan. You have to pay up to five EMIs in advance and the balance is paid through post-dated cheques covering the remaining period of the loan. One of the downsides of this scheme is that though it offers 100% finance, you need to pay five to nine installments up front. Besides, you go on to pay a higher EMI amount because the interest is charged on the entire loan amount.
