Buying a lavish car is a dream of almost every individual. But it is not everyone’s cup of tea to pay the full payment at one time. Thus, to fulfill your dream of owning a luxury car, plenty of renowned car dealers, credit unions and banks are here to help. Yes, with the help of obtaining a car loan, it would be easier for you to buy a car that suits your taste and budget. These days, there are many reputed banks or financing firms are available in the marketplace that offer you flexible and unmatched car loan deals. Thus, there is every possibility for you to get confused and you won’t be able to decide to trust whom, especially if you are buying your first car. You want everything to be perfect for your very first dream car, and might be in a state of confusion regarding that.
Now, no more worries as this article will clear all your doubts by sharing the useful information regarding the important factors to keep in mind while availing a car loan:
- Know Your Eligibility for Car Loan
- Minimum Age: 21 years
- Maximum Age at Loan Maturity: 65 years
- Minimum Employment: For Salaried 1 year in current employment and minimum two years of employment / For Self- Employed at least three years in business
- Minimum Annual Income: For Salaried Rs 100000 net annual income / For Self- Employed Net profit Rs. 60000 p.a for standard cars and Rs.100000 p.a. for mid-sized and premium cars
- Telephone: Must at residence
- Compare Rate of Interest
After knowing your eligibility, the next thing you should consider is the rate of interest. There are numerous banks that offer car loan services, so it is absolutely important for you to compare the interest rates first. Different banks offer different ROI, so start comparing the APR, i.e. Annual Percentage Rate that you are going to pay on the money you borrow. However, many times getting a car loan at zero- interest is not the best deal to get. So, instead of getting attracted towards the offer, use your mind and be attentive while comparing the rate of interest.
- Plan Your Down Payment
The more down payment you pay towards the total purchase price of a car, the less you need to pay in your monthly EMIs. Actually, a big down payment will help you with the lower APR because of the lower risk for lender, in case you have tarnished credit. The more amount you pay as a cash down payment while buying a car, the less amount will be calculated as your monthly EMI. But, make sure it should not affect you budget, so plan you down payment accordingly.
- Calculate Your Monthly EMI
When it comes to car loans, they are usually paid off on a monthly basis. While keeping your budget in mind, you should calculate how much monthly EMI you can afford for your car loan. However, prepare yourself in advance because EMIs are not the only cost attached while owning a car.
- Tenure of the Car Loan
The term or tenure of paying your car loan can last up to 72 to 84 months. But, be careful because extended loan tenure with less monthly EMI may cause you to pay for such a car that you actually can’t afford. The interest rates will be higher, and this thing can actually disturb your monthly budget and finances. So, it’s always be wise to go for a tenure of approx 36-60 months, so that your monthly EMI will not affect your monthly home budget.
- Check Your Credit Score
Maintaining a good credit score is really very important when it comes to availing a car loan. Actually your credit score is the main aspect behind determining what interest rate you are going to pay.
|700+||Most favorable APRs|
|Less than 600||You are at a credit risk; expect a high APR|
If satisfy any bank with your good credit score, you are eligible for a car loan, hence your application with the bank includes :
- Your present and past addresses so as to establish from how long you’ve been living in an area.
- Your occupation and current employment history from how long you have been working in company, plus to know your annual income.
- Your additional source of income, if any.
- The information about your current loans and credit cards you own
In case, you have bad credit score, the bank can’t trust you so easily, hence the bank will put less weight to your score, and more on your history and current income. So, all you need to do is just improve your credit score to get the loan easily.
- Availing A Loan from Bank
- After you are done, with deciding the bank you are taking a car loan with, just try to investigate more about your bank, what loans it is offering.
- Check APRs offered by the bank on the loans.
- Try to negotiate with the bank to get the discounted rate.
- Once you have been approved for a loan from the bank, make sure to submit all the required documents which shows that you are pre-qualified for a loan.
- Check Additional Loan Charges:
There might be a possibility that bank can charge you with the additional fee to avail the loan. You have to keep your eyes and nose open to ensure that whether these charges will be included into APR or should be calculated separately.
- Miscellaneous Fees
Try to avoid such offers from the bank that charge you great fee. If you maintain a good relation with the bank, you will surely get lucrative offers from the bank without these fees.
- Thoroughly Read the Terms & Conditions
Before taking the big step, it is mandatory for you to read all the important documents, terms and conditions by the bank. Read each and every single clause mentioned in the terms and conditions to avoid any issue in the future. You need to be extra careful here, and it would be great, if you can take the advice from an expert here.
(Updated on: 2nd November, 2016)