5 Things To Know About Car Loans Before Applying
Purchasing a four-wheeler is one of the major investments made by many people, which comes second to buying a house. Although cash payment is the most ideal scenario, in practice, many people opt for an auto loan to pay for the used or new cars. Before even starting the process of buying a car, check out these five important things you should be aware of about car financing.
1. You should know your credit score well
A credit score is the most crucial criterion to determine what kind of loan will be pre-approved. It also helps to know the pre-qualification of a loan. Irrespective of whether you plan to approach the dealership, auto loan dealer, or a bank, the approval of your car loan application will depend on it.
2. Choose the tenure for your loan payment sensibly
There are loan executives who are known to influence the loan applicant to choose a particular car loan, which may look alluring to them. A loan repayment term is an important thing to consider before opting for a vehicle loan as certain executives may mislead you. It is thus imperative to choose the minimum tenure for loan repayment so that you can save plenty of bucks in the long run.
3. Complete and accurate documentation
All lending institutions adhere to the Know Your Customer or KYC norms before granting loans. As such, certain documentations have to be complied with and verified to get the loan approval. Before you shop for your preferred car, it can also help to obtain a pre-approved vehicle loan from your chosen lender. Thus, your car loan can be processed faster. You can be also in a more comfortable situation by bargaining for lesser fees or other add-ons while completing the deal.
4. Look around for the most lucrative interest rate
You should carefully compare the interest rates provided by different financial institutions or banks prior to applying for your car loan. The market does not usually have any standard interest rate and it can have a major effect on your repayment amount to the lender. You may ask for quotations from various dealers of your preferred vehicle. Each car dealer typically ties up with a distinct lender. As such, you may get different quotes on charges and interest rates. So, evaluate the various available deals to get the most lucrative interest rate.
5. Compute the EMI for your car loan, foreclosure penalties, and service tax
Luckily, these days, many financial websites provide simple EMI calculators. These can assist you to calculate, as well as, plan the monthly EMIs. Thus, you can get help to make up your mind about the most suitable loan and interest rate for your vehicle.
You should also find out processing fees charged by various lenders and then compare the different lending choices so that you can draw an informed conclusion. At the same time, you should also enquire about service tax to know whether you have to pay a lump sum one time or have to pay it annually.