What is a car loan?
A car loan is a type of loan given by banks to individuals to finance the purchase of a car. The car being purchased is used as the “asset” that guarantees the loans. The typical period of a car loan is between 1 to 7 years.
What’s the difference between a car loan and a personal or home loan?
Personal loans do not include an asset guarantee; the guarantee is only your salary.Home loans are guaranteed by the house purchased and have tenors of up to 20 years. A car loan is guaranteed by the car you purchase, and you are not allowed to sell it or even renew the license without the approval of the lending bank.
What do I need to be eligible for a car loan?
Car loans are given under four main programs (i) Employees, (ii) Professionals (doctors, lawyers, etc. who are freelancers) (iii) Self Employed & (iv) ID Program. The required documents for the car loans are :
What are the typical documents needed?
The documents needed differ based on your employment type and on the bank extending the loan. The following are the typical documents requested:
How much does a car loan cost?
There are five main variables to take into account when looking at the cost of a car loan:
Interest Rate: The interest rate is the main cost factor when taking a car loan and it is the amount that is charged depending on the period of the loan (for more information about interest rates please refer to the interest rate section of the Help Center https://faydety.com/en/help-center/interest-101-6). Interest rates are expressed in two formats but they both lead to the same interest amount:
Decreasing Interest Rate: This rate is the percentage to be charged against only the outstanding amount of the loan in any given period
Flat interest rate: This rate is a different presentation format which shows the percentage to be charged against the initial amount borrowed.
Please remember that the flat interest rate is a different representation of the Decreasing Interest Rate and they should not be compared
Please remember that admin fees are deducted from the amount you are borrowing as an initial payment. So, if you are borrowing LE 100,000 and your bank charges an admin fee of 2.00%, the bank will only transfer LE 98,000 to your account but your installments will be based on a loan of LE 100,000.
Make sure you check the differences in interest rate vs. down payment percentages to get the best deal for you.
How long can I borrow the money for?
The typical period for car loans is between 1 to 7 years and that will be available in the majority of banks. Some banks lend for periods as little as 6 months and as long as 10 years. Make sure to check which banks offer loan periods that suit your needs.
Can I buy any car?
That again depends on the bank, there are three main categories to consider here:
How do I apply for a car loan?
Currently you apply for a car loan by either calling the call center of your bank or visiting a branch, a loan officer will take you through the process. To make sure you have an efficient process make sure to visit our car loan page (https://www.faydety.com/en/borrow/car-loan)
to make sure you are eligible and have the required documentation ready.
APPLY ONLINE: Through Faydety's online application, you will be able to apply for car loans from the comfort of your home, office or anywhere else!
Our blog makes understanding finance a breeze…