For most people, owning a car symbolises independence, convenience, and a means to pursue personal and professional goals. But buying a car upfront is a mirage and presents a significant barrier. That’s where KCB personal car loans come into play, offering a practical solution to finance the vehicle of your dreams.
A personal car loan is a financial tool that enables you to purchase a vehicle while spreading the cost over time. Whether you’re eyeing a new sleek sedan, a versatile SUV, or a reliable used car, a personal car loan is what you need to actualise your dreams.
In this article, we dive into personal car loans, exploring their benefits, eligibility criteria, application process, and tips for effective loan management.
Overview of a KCB Personal Car Loans
Buying a car for the first time is a hassle for most people. KCB Bank came up with a personal car loan after recognising this gap.
KCB personal car loans are financial tools customised to assist you in purchasing a vehicle. The loan provides the necessary funds to buy your first car or update your current set. You may find the loan useful if you don’t have the full money to purchase a vehicle outright or prefer to spread the cost over a specific timeframe.
KCB Personal Car loans are secured, but you may visit your branch closest to confirm whether you can get an unsecured car loan. Therefore, you will require collateral for this loan, such as a car. Using the vehicle as collateral means it can be repossessed by KCB Bank if you default on the loan.
Should the bank offer you an unsecured personal car loan, it’s probable that the loan will have high-interest rates. This article explains everything you need to know about personal car loans and how to benefit from them.
Benefits of Personal Car Loans
We cannot exhaust the benefits of personal car loans for individuals wishing to own vehicles. Compared to applying for a different type of loan and purchasing a car using the funds, a personal car loan offers the following benefits:
No. 1: Flexibility in Vehicle Selection
A KCB personal car loan lets you choose the vehicle that best suits your needs and preferences. Compared to other financing options, such as dealership financing or leasing, a car loan is not limited to specific makes or models. The bank allows you to explore new or used cars and purchase from private sellers or dealerships. The borrower can use the flexibility to their advantage and buy based on their budget, lifestyle, and desired features.
No. 2: Convenient Repayment Options
KCB Personal car loan offers a 72 months repayment period, convenient enough to complete repayment. KCB offers flexible repayment terms by matching your loan duration with the car’s valuation. The flexibility enables you to select a repayment schedule that aligns with your income and budget, ensuring that monthly instalments are manageable.
No. 3: Competitive Interest Rates
KCB personal car loans come with competitive interest rates, especially for borrowers with a good credit history. The personal car loan has competitive interest rates because the vehicle serves as collateral. The low rates result in significant savings over the life of the loan and reduce the overall cost of financing the vehicle.
There are enormous benefits of applying for personal car loans over seeking other financial options to purchase the vehicle. The convenience and flexibility of this type of loan are the primary benefits.
There are even more benefits depending on your circumstances, associated tax advantages, and tax laws. For example, people with disabilities are exempted from several tax categories, including personal car loans.
Eligibility Criteria for KCB Personal Car Loans
If you contact or visit the KCB bank branch closest to you, they may guide you on more requirements, but the general eligibility criteria for KCB personal car loans include:
- An active KCB account for at least three months.
- Proof of security for the loan
- Credit History: KCB Bank evaluates your credit history to determine repayment behaviour and creditworthiness. Excellent credit history, characterised by a solid payment record, low credit utilisation, and a limited number of delinquencies or defaults, increases the chances of loan approval. Lenders may also consider the borrower’s credit score, with higher scores generally indicating lower credit risk.
- Loan-to-value ratio: Loan-to-value ratio (LTV) compares the loan amount to the vehicle’s purchase price. More often than not, KCB Bank offers borrowers maximum LTV requirements. This means the bank may only finance a certain percentage of the vehicle’s value. A lower LTV demonstrates lower risk for the bank, while a higher LTV means higher risk. Borrowers with lower LTV often get more favourable loan terms.
- Down payment: Although KCB personal car loans don’t always need a down payment, having one can improve the chances of loan approval. It may help secure more favourable loan terms from the bank. The bank views borrowers with a down payment as less risky as it reduces the overall loan amount, potentially lowering monthly payments and interest costs.
Personal Car Loan Application Process
KCB Bank’s loan application process is minimalist and procedural, as with any other bank. Here’s a breakdown of the steps to follow:
Step 1: Researching Loan Options
Research the different loan options available at KCB Bank before applying for a personal car loan. The bank has other loan options, including personal loans that you can use to boost your down payment and purchase a car. Compare the loan options, interest rates, loan terms, fees, and other factors.
Step 2: Gathering Necessary Documents
Gathering the necessary documents beforehand can help streamline the application process. I forementioned some documents you need, including a three-month active KCB bank and proof of security.
Step 3: Visit a KCB Bank Branch and Fill out the Application Forms
You must visit a KCB Bank branch, and the bank agent will offer you a form to fill out. KCB Bank doesn’t provide an option to fill out the form online through their website. Most personal car loan application forms by KCB require that you provide personal details, income, employment, and the vehicle you intend to buy.
Step 4: Reviewing Loan Application
Once you fill and submit the forms, the agent submits the forms, the bank does its internal reviews with the information you provide, and assesses your loan eligibility. The bank may decide to maintain, lower, or increase your LTV. KCB Bank’s internal review takes 1 to 7 days.
Step 5: Loan Approval and Disbursement
Once KCB Bank completes its internal review, it may reject or approve the loan. If the loan is approved, the bank agent may summon you to advise or walk you through the agreed terms. The loan is disbursed to your account within 24 hours of agreeing and signing the terms.
NOTE: Understanding Loan Repayment Terms and Conditions
Before accepting a loan offer, ensure that you fully understand the terms and conditions of the loan. This means understanding everything, including potential penalties and fees for early and late payments and defaulting on a loan. Seek clarification from the bank agent and negotiate the terms if possible.
Managing a Personal Car Loan
Addressing this topic by sharing snippets on managing personal car loans would be worthwhile. Learning to manage helps you avoid defaulting on the loan, which could attract fines and charges. Here is how you can manage your car loan:
Tip 1: Creating a Budget for Loan Repayment
You should have an existing budget to manage your earnings and loan repayment. Evaluate your monthly income and expenses to determine how much you can comfortably allocate towards loan payments without straining your finances. Don’t ignore other financial obligations like rent/mortgage, utilities, insurance, and maintenance costs. Your budget should be realistic to ensure consistent loan payments without financial stress.
Tip 2: Make Timely Payments
Timely payments are crucial for managing any loan effectively and keeping your credit score positive. Set up reminders or automate your payments to never miss a due date. Making late or missing payments result in penalties and increased interest charges and negatively impacts your credit score. Prioritise your loan payments as an essential financial obligation.
Tip 3: Explore Refinancing Options
It’s worth periodically evaluating refinancing options as you progress or in case of any emergencies that may drain your cash. Refinancing involves replacing your current loan with a new one that offers better terms, such as a lower interest rate or extended repayment period. Refinancing helps you lower your monthly payments, reduce costs, or adjust the terms to better align with your financial situation.
Conclusion
Personal car loans provide flexibility and convenience, from allowing you to choose from a wide range of car varieties to other benefits, including better repayment options, competitive interest rates, and potential tax advantages in some instances.
If you’re considering purchasing a vehicle, explore KCB personal car loan options. In addition, you can explore other loan options that can finance you to buy a new car. One such option is a KCB Personal Unsecured Check off loan.
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