Planning to buy a new car? If yes you will definitely be excited about it, but at the same time you should ensure that you have secured the best possible car loan amongst your auto loan financing options.
With the increasing conflict between various interest rates offered by different banks, it is very important to understand the terms and conditions before you apply for a car loan.
Here are the 7 factors you should be considering before applying for a car loan
1.Check for lower interest rates
The initial thing to start with car loans is to compare the interest rates offered by various banks or financial institutions. Since there is no fixed rate in the market and the interest rates may vary from flat to floating, even a small difference in the Rate of Interest will make a great impact on your capital through EMI.
2.Consider the down payment
The value of your car may vary between the showroom value and the on road cost. The banking sectors offer up to 85% of on road cost for a car. But the higher the down payment you make, it will largely reduce the EMI you have to pay. Some banks also offer a 100% on road cost of a car to its privileged customers, but with higher EMI.
3.Review your CIBIL Score
Check on your outstanding debts and your total annual income, thus making sure you can regularly pay the interest/EMI without any difficulties. A good credit history increases the chance of acquiring larger loan amount. Nowadays an individual’s CIBIL (Credit Information Bureau Limited) score is strictly reviewed by the banks before funding him with a loan.
4.Go for lower processing fee
Though the banks offer attractive EMI’s and down payments, they may charge you with a huge processing fee. While some banks have varied processing fee, depending on the loan amount; others may demand a flat fee for processing. So choose wisely keeping the processing payments in mind.
5.Check on Foreclosure charges
Check on how much penalty is rendered if you try to repay the entire loan earlier than the policy tenure. Most of the buyers are not aware of this factor. So check with various banks for the foreclosure penalty before taking hold of a car loan.
6.Decide wisely over your Loan tenure and EMI
Before going for a car loan decide on how long you are going to be paying your EMI and make your cash down payment accordingly. If you choose a larger EMI the smaller will be your tenure and the converse is also possible.
7.Have a look out for schemes and offers
The banks may give out attractive schemes and offers on various types of cars or based on some celebrated events. Try to get a loan over these customized deals thus making your car loan an even easier aspect to be tackled with.
On the whole always keep a watch over the best interest rates and EMI options available in the market. With the above mentioned factors in mind, buying a car would definitely be an effortless thing for you.
