Things to Consider Before Going for Car Finance
There are a few things that you need to keep in mind when looking up car financing plans. Here is a list you need to check when looking up a car financing plan.
Different banks have different requirements so you need to check which banks you can approach. Usually all banks require bank statements, income statements and information regarding any loan that you might have taken in the past but you still need to go through the forms thoroughly.
2- Payments and Interest Rates:
Firstly, you need to figure out how much you can pay every month and will you be easily able to pay every month. After that you need to see the interest rates of the banks. Different plans will have different interest rates and you need to go with the one that is suitable for you.
State your personal information as correct and accurate as possible. Choose the payback period that best suits your budget. The longer the term, the lesser the installment amount, but in the end you would be paying at least 25% more than a shorter-term lease. Short- term lease is preferred. Get an amortization chart based on your preferences. This is a blue print of all the financial calculations. Keep it safe.
After submitting the application form, a verification officer who, with or without your knowledge, would verify the facts you mentioned about your home, salary package, credit card limits and references. Any wrong information will lead to submission of negative report by the verifying officer or the outsourced firm hired for this purpose. Get a file and have all documents photocopied.
And keep the same for your record. You would require some of them at some later stage. Tell your references to expect a call from the bank. Also inform the HR department, if you are a salaried person that if some bank or leasing company inquiries about your salary status, informs them accordingly. Pay the processing fee to the bank through cheque (for record purposes): non-refundable.
POST APPROVAL PROCESS:
Once your loan is approved, you will require to sign, 0- 0 pages document book and some other legal documents including an affidavit that in case of your death, the bank shall have the right to repossess the vehicle. You might have to sign an open transfer letter in favor of the bank. If you are not maintaining your account with the same bank, you might be required to give post-dated cheques, equal to the total number of installments. Some banks may ask you to deposit the cheque or cash on monthly basis, depending upon bank’s requirements.
PLACING THE ORDER:
If everything is in order, approval of documents and issuance of Pay order usually takes – days. By this time bank or the leasing company shall remain in constant touch with you to give you a care-banking attitude. Once approval takes place, they would hardly notice your existence. Try to remain involved in the whole process by inquiring the stages completed, avoiding their irritation. Also, at the time of placing the order, make sure your name, address, NTN, car variant, color and the delivery period are all correct. At a later stage it would be difficult to make corrections, especially in the invoice and sales tax certificate or color option. Get photocopies of the Pay Order that the bank gives to the authorized dealer and the provisional booking order for your record and keep in the file you prepared for the purpose.
TRANSFER OF OWNERSHIP:
Submit an application to the concerned ETO requesting removal/deletion of HPA clause, if it’s a financed car. Attach original registration documents. In case of leasing, and if you intend to transfer it in your name, fill in the T-1 form and transfer letter. Deposit the requisite fee on Challan 32-A at NBP or SBP counters. You will get the car documents back in a month’s time. Now you can sell the car any time you want.
TRANSFER OF LEASE:
A leased car cannot be transferred from one person to another, under any circumstances. Those who do this on judicial stamp papers have no legal standing or binding. This can be an unofficial arrangement. Banks or leasing companies are not responsible in any case.
LEASING IMPORTED/SECOND HAND CARS:
Like re-financing this is also a specialized field. Not all banks indulge in this. After evaluation, the fair market value of the car is assessed, irrespective of your declared value. All import related documents are required including B/L, invoice and customs papers. Rest of the procedure is same.
Before selecting a bank or leasing company, make sure you meet some responsible & relevant person of the company to answer the above basic questions. The runner, who assists you in filling the application form, might not know all the policies of the bank, therefore do not rely on him or take his advice very seriously. Always seek a second opinion. The best bank would be which is flexible and has user friendly policies. There are lots of hidden costs.