Today, with the easy availability of car loans from leading banks as well as non-bank financial institutions, your wait for your dream car will not be long. However, understanding car financing is the first step to getting the best deal on your car loan. Whether it is for new cars or for used cars, there are loans available today with attractive features and interest rates, but it can be difficult to choose from the wide variety of options available.
The car loan process itself is a simple one today that does not take much time from application to disbursal, thanks to technology. So here are some simple things to take into account to ensure that you get the best car loan for your requirements:
- Plan your budget: In order to ensure that you are able to comfortably pay off your EMIs once you do get your loan, it is important to understand exactly how much you can afford to set aside every month. Ideally, this should not exceed 10% to 15% of your net monthly income. If for any reason you are unable to pay off the EMIs on time, the car will be seized by the bank as it is hypothetical to it (since car loans are secured loans). Understanding your budget and repaying your loan on time every month ensures that your car remains with you.
- Ensure you meet the eligibility criteria: There are some common criteria to be eligible for car loans. This could differ from bank to bank and would require supporting documentation as well. Ensuring that you have all this in place will increase your chances of getting your loan approved. You would need age proof, address proof, income proof, etc. For this you might need Adhara card/passport/voter ID, and PAN card/driving license, as well as income tax return statements/bank account statements/salary slips, etc., as the case may be.
- Repayment tenure: This can be anywhere between 1 year and 7 years. It is important to take into consideration that a lower repayment tenure will have lower interest rates and vice versa. A shorter repayment tenure means you will also pay off your car loan faster, which makes it easier for you when you want to sell your car and upgrade to a new one. However, a longer repayment tenure is ideal if you have a cash crunch and makes it easier on your pocket. If there is a reduction in the repo rates later, this could be of benefit to you, so you may end up paying lower interest rates too.
- Go with banks that you already have a relationship with: If you already have a credit card, fixed deposits, other investments, or another loan from a bank, then the chances of getting your loan approved with lower interest rates or a discount are higher. So instead of shopping around with banks that you don’t know, find out about the bank that you already have an account with, such as salary account or an individual one.
- Maintain a good credit history: Paying your EMIs and credit card bills on time will increase your credit score or CIBIL score. This is a database that will be checked by banks when you apply for any kind of a loan. The higher your credit score is, the better the deal you will get on your car loan.
- Hidden charges: It is important to know about these charges before applying for a car loan. For example, processing fees and other miscellaneous charges can be very high and add up to your EMI. Read the fine print carefully and ask questions about these charges before you sign on the dotted line. Pre-payment penalty is another hidden charge that you need to be wary about. This means that if you are in a position later to pay off your loan with a lump-sum amount, then you would have to pay a penalty that could be as high as 5% of the loan amount (this differs from bank to bank). There are banks that do not have a pre-payment penalty. If your bank does have one, then you could negotiate for a reduction or a waiver before going for the loan so that there are no surprises later.
- Compare car loans online: The internet makes it easier than ever to compare car loans across a variety of parameters such as interest rates, repayment tenures, eligibility criteria, other fees, etc. You can do your research online and then make the call regarding which loan works for you. It is important to compare car loans on a reliable and trustworthy website that is updated regularly, such as BankBazaar. Here you will not only get the latest interest rates but also special features of different car loans that will help you take a better decision.
Follow these tips to get the best deal on your car loan and drive home your dream car in the shortest time possible & Worry no more, as there is a wide range of car financing options available to you right here! With interest rates as low as 8.60% p.a. and repayment tenure of up to 8 years, you can find the most suitable vehicle loan for your needs.
Did you know that you can also benefit from an Amazon gift voucher when you purchase specific car loan products in the month of February from Bankbazaar.com?
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