4 Key Things To Get Best Top Up On Car Loan
Many of us pick up car loans without understanding the long term burden that we may be taking on. If you are struggling with the current car loan due to its heavy rate of interest, it is advisable to refinance your car loan with a loan against your car. A fresh loan to pay off your existing car loan is refinancing, which also provides extra money for other needs.
Few tips from CarDekho.com on getting the best top-up loan on your car:
The original loan amount is the biggest factor that determines car refinancing. One can get a loan up to Rs 25 lakh against the car but it is dependent on the model of the car. A higher original loan amount leads to a higher top-up loan amount. For example, if the original loan amount is Rs 6 lakh, then the loan against car amount could be anywhere between Rs 7-9 lakh, depending on the loan tenure and number of EMIs already paid.
Tenure of the original loan is important to determine the loan amount against your car. The longer the loan term is, the higher will be its cumulative interest charges to be repaid over that period. But that also means that it will fetch a greater loan amount when one applies for refinancing.
For example, if one has an EMI of Rs 15,000 for an original loan amount of Rs 4 lakh and a loan tenure of 24 months, he/she will get a new loan of approximately Rs 4,91,759. Out of this, Rs 2,18,759 will go towards the foreclosure of the existing car loan, while he gets Rs 2,73,000 as extra top-up amount as cash in hand.
But if the loan tenure is longer, say 48 months, the refinance will fetch approximately Rs 5,56,490. However, the extra cash in hand amount will remain the same (Rs 2,73,000), while the amount that goes towards the foreclosure of the original loan will be greater, about Rs 2,83,490. That’s a difference of almost Rs 65,000 determined just by the loan tenure.
The EMI on the current car loan will help determine the split in top-up loan against the car. In simpler terms, this means that specifying the EMI of the current loan will show how much of the loan amount will go into the foreclosure of the current loan and how much you will get as cash in hand.
To be eligible for balance transfer car refinance or a top-up car loan, one needs to have paid a minimum of 12 EMIs on the existing car loan. The number of EMIs paid is a crucial factor that helps to determine the loan amount as it indicates how much of the original loan amount has been paid already.
