Features of NRI Car Loan Schemes
Borrower/ Guarantor clause
If an NRI wants to buy a car in India by taking a car loan, he can do so by purchasing the car in the name of a relative (who should be an Indian resident). In this way, the resident relative becomes borrower of the car loan whereas the NRI becomes the guarantor. In simple terms, the car gets registered in the name of the relative though the loan is repaid by the NRI.
The maximum loan amount which can be availed by NRIs for buying a car is calculated on factors such as the income of the NRI, the NRI's repaying capacity and the cost of the car.
Banks charge interest rates on car loans for non residents in accordance with the guidelines issued by Reserve Bank of India. Just like interest rates on any other loan product, the rates on NRI car loans also vary from time to time. At present, they range from 10.50% to 15% depending on the bank.
The repayment of car loans for NRIs can be done in 1 to 7 years, depending on the repayment period offered by the bank from which the loan is availed. The repayment period together with the loan amount and interest rate is taken into consideration for arriving at the Equated Monthly Installments (EMI) which will payable by the NRI.
Car loans to NRIs are advanced with security. In case of defaults in loan repayment, the documents of car may be hypothecated. At times, banks waive off security requirements by taking into consideration a good loan track record of the NRI with the bank.