Volkswagen Financial Services- 19 Dec 2018

Picking the Right Plan for Repayment of Car Loan

Car loans in India have become extremely popular in the past few years with financiers creating more innovative loan products each year in an attempt to attract more and more customers. There are several kinds of customised car loans available in the market meant to suit different requirements of the borrower. In addition to the various types of car loans one can avail of today, also available are several options to repay a loan. Most of us are not aware of a variety of ways in which one can wrap up a car loan.

Applicants must learn about various methods available to them at the time of signing a loan agreement with a financier. Today, multiple schemes exist for the repayment based on the kind and degree of convenience involved.

Discussed below are types of car loan repayment plans one may choose from:

Regular EMI Plan:One of the most common types of repayment options in car loan that is accepted and offered by every lender. Under this method, a fixed car loan interest rate is decided and then the total amount (Principal + Interest) is divided in terms of monthly instalments. The USP of this option is its low interest rates. The ‘Classic Repayment Option’ from Volkswagen Financial Services is an example of regular EMI plan.

Balloon EMI Plan: Under this method, there is a provision that a percentage of the total loan amount will be repaid at the end of loan tenure. The USP of this option is lesser burden over the borrower in initial stage. Balloon Repayment Option is perfect for borrowers who expect financial gain in the next few years.

Step-up EMI Plan: In this method, the amount of EMI increases during the term as the payment progresses from being lowest in the first year and increasing steadily thereafter. The USP of this repayment option is that since the initial EMI amount is low, the borrower gets used to paying higher EMIs as their income increases. It is ideal for people who expect their income to increase after regular intervals.

Step-down EMI Plan: Unlike the step-up EMI option, here the amount of EMIs gradually recedes with the progression of time, from being highest at first. The USP of this repayment option is that the total cost of the loan might be less as the principal amount is paid back pretty soon.The Step-down Repayment Option is ideal for people with high disposable income. It is a super-saver plan because it has the least interest outflow.

Bullet EMI Plan: In this method, the advantage is that besides regular EMI payments, an additional amount can be paid annually during the period of loan tenure. The USP of this option is quicker repayment of loan. Bullet Repayment Option is perfect for borrowers who receive periodic incentives and can manage periodic payments, thereby reducing EMI payments by a huge margin.

EMI Holiday Plan: Exclusive to Volkswagen Financial Services, the EMI Holiday Option’s USP is that it offers the freedom to skip car loan EMI payments for the first year (12 months). In simpler terms, the borrower starts repaying their car loans from next year, while driving his brand new Volkswagen group car by paying just INR 1 for the first year.

Upgrade Plan: True to its name, the Upgrade Option from Volkswagen Financial Services offers an easy upgrade from an existing Volkswagen group car to a brand new group car with absolute ease! This option is suitable for those looking to move up the status ladder.

Each customer has a different set of financial considerations based on which he/she can find the most suitable option for their car loan. However, having a thorough understanding of various options available in the market makes it easier to take a more beneficial decision. To know more about the plans and your EMI, visit -