Question 1

How much of the car price can be covered by a loan?

Accepted Answer

Usually, banks finance between 80% to 90% of the car's 'on-road' price. The remaining 10% to 20% must be paid by you directly as a down payment.

Question 2

Is the car loan interest calculated on a reducing or flat rate?

Accepted Answer

Most modern auto loans operate on a reducing balance method. This means interest is calculated only on the outstanding principal balance each month, rather than the original loan amount.

Question 3

What happens if I miss a car loan EMI?

Accepted Answer

Missing an EMI will incur late payment fees, damage your credit score, and accumulate penal interest. If multiple EMIs are missed consecutively, the lender holds the right to seize the vehicle since it acts as collateral.

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