With the rise in incomes over the years, owning a car is no more a status symbol. While some of the commuters might prefer public transport or cabs, having one automobile in a family of four is a common thing now.
For most of the people, it’s also related to their professional growth. The higher one grows in his career, the higher the aspirations such as a car, house, etc. Money isn’t a restriction anymore as banks, as well as finance companies, are offering easy car loan. As compared to previous days, buying a car is now relatively easy owing to various financing schemes that are offered by banks and other financial institutions.
Getting a car loan to finance your vehicle isn’t a hassle anymore as you will more often than not find a bank representative within the car showroom. In case you fulfill all the eligibility criteria, you’re furnished up to 85% to 100% of the total cost as the loan. Listed below are some of the points which you should bear in mind when going for a car loan.
- Know your credit score
Your Cibil or credit score is the most important factor which determines what type of loan you would be able to secure from any lender. Whether you are going through financial institutions, auto loan dealers or with the dealership itself, the interest rate would depend on it. Better the score, better the chances of getting a lower rate of interest on your loan.
- Ensure your documents are in order
Sometimes, securing a car loan isn’t that easy. Banks and other financial institutions follow KYC (Know Your Customer) norms for the purpose of granting loans. And they go through and verify a number of papers and past credit history and you must have all the required documents at your disposal. Some of the documents which are commonly asked include income proof, address proof, bank statement, PAN, income tax return statements of previous financial years, credit card statement, etc.
- Calculate Your Loan EMI
Today, free car loan EMI calculator can be found over the web. They help you to plan your monthly EMIs. One thing to keep in mind that when you calculate your EMI with the help of car loan EMI calculator, use the agreed interest rate and then decide which one’s better for you.
- Loan Repayment
Most of the lenders today, offer flexible repayment period which stretches from 1-7 years. Borrowers could choose the loan repayment period as per their convenience. Borrowers also have the option to prepay their loan obligation.
- Prepayment Penalty
When you’re taking a car loan from any bank never forget to check the foreclosure penalty details. It is something which most of the car buyers aren’t aware of. If you repay your loan obligation in a lump sum before the repayment period, your bank might charge a prepayment penalty on the remaining loan amount. Banks have different prepayment penalty rates, so it’s advisable to check it beforehand.
- Read the fine print
Check your loan terms for the details on processing fees, foreclosure charges, partial payment and such other clauses which might affect you later.
Finally
Before zeroing on your car loan, it’s imperative for you to do your homework. In case you’re a first-time car loan applicant, the process might seem very confusing. There would be a lot of words thrown in your loan application; make sure that you appreciate the exact what is provided there.
You have to put in your share of work for ensuring that you find the best possible loan deal; while avoiding the mistakes which most of the people make. Overall, the points mentioned above could help you in securing a better car loan without any stress.
