Understanding the car loan repayment mechanism

An auto loan has become a convenient way to purchase a vehicle as it breaks the overall lump sum of amount into smaller chunks of flexible monthly installments. The most crucial aspect to consider is that you don’t have spent your complete savings, you can have 30% as a down payment, and the rest of the money you can opt for as a loan. Besides this, the globalization has also put some positive impact on such loans among the consumers. 

Repayment can be defined as the normal payment that an individual has to do to satisfy their car loan. Different steps are present in the market to repay the debt amount taken from the bank such as regular EMI, step-up EMI, and step-down EMI. To use all the repayment options easily, the borrower should know the pros and cons of every method. You can also calculate the right amount of monthly installment by using the car loan EMI calculator over the internet.

Four-wheeler loan repayment types: Below are described the 6 commonly used vehicle loan repayment method:

• Regular EMI:- This is the most normal repayment method used as you have to fix a monthly installment based on the assigned duration and the interest rate. You can pay normal EMI either at the rise or end of the month.

• Step-down EMI:- It is a type of repayment technique where the EMI slightly decreases from more to less. This reduction in the EMI can be done based on the number of successful repayments completed.

• Step-up EMI:- It is a type of repayment technique where the initial EMI is charged lesser and slightly increases based on the expected income. However, the EMI change can happen two times during the overall loan duration.

• Special bond method:- Sometimes, there has been a contract signed between the lender and the borrower in a way that when the funds are in a substantial amount. This acts as a profit to the borrower as there is a relaxation in the interest rate.

• Balloon EMI:- In this type of repayment technique, clients are allowed to pay the lump sum amount at the end of the debt repayment duration. This method helps in reducing the loan repayment burden from the borrower in the beginning.

Four-wheeler repayment schedule:-

An automobile debt repayment schedule will show how your EMIs are used to pay the interest each month. An automobile debt repayment schedule will provide you the knowledge about the EMIs, interest rate, and also interest reduces on monthly basis because of EMI payments. To make an automobile repayment always try to calculate your monthly installments over the internet.

Loan repayment is one of the most crucial aspects to consider while opting for an automobile loan. If the borrowed shows a reliable repayment, then there are changes in the form of the increase in the credit score. Indian Bank Car Loan has a great repayment procedure.