Getting a car is a dream to many. Moreover, if we look at it from the perspective of the past two decades, it has been a huge dream for a lot of Millenials and Gen Z who want to retire early and travel the world. Cars are merely just a form of transportation from one place to another;
They have taken a higher standard than ever before. The best part about this new trend is that – it is much easier to get a car than before – all you would have to do is apply for a car loan. But, before you could actually apply for a car loan, you would have to know some things, and that is what this post is going to talk about. Major Things You Need to Know Before You Can Apply for a Car Loan. Here are some factors that just can’t slip the naked eye while you apply for a car loan:
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Things to do Before Applying Car loan
1) Know More About the Lender
Do not ever jump at the first opportunity you see. You would have to remember that there are a lot of options out there for you when you want to apply for a car loan. If you find a lender who is willing to approve your car loan, or even when you have a pre-approved car loan from that lender, you need to be sure about them. You cannot be a customer of a bank or institution that does not completely have your trust. This will only lead to problems in the future.
2) Interest Rates Will Always Matter
This is, without a say, a given. You would have to know that the interest rates are a burden to you, and the lower they are, the better it would be. These interest rates that would be charged on your car loan are also associated with your CIBIL score and the tenure that you choose to pay off the car loan. When you are not quite sure of how much you would be charged as interest from your lender, you can simply use an online calculator to know the exact rates. For instance, if you are choosing a car loan from HDFC, then you can use the HDFC Car loan emi calculator.
3) Choose the Tenure for the Car Loan Wisely
Usually, most banks will give you the option to extend the repayment tenure to a period of 7 years. But, though seven years is the longest tenure – and the EMI for this tenure would be low, it is not the wisest decision that you could possibly make. You would have to make a wiser decision and start repaying the loan for a shorter tenure. By this, there are high chances that the interest rates would be much lower, the interest amount that you pay would also be lower, and most importantly, you will be incurring much lesser costs. The only hard thing about this part is that the amounts that you pay would be higher.
4) The Model Matters
You cannot over-buy or even under-buy. This is when you would have to choose the perfect model for you and the loan that you are opting for. Most banks have different kinds of models and schemes for each model, so you can enjoy their schemes.
5) Is Your CIBIL in Line?
Your CIBIL score does play a vital role in the car loan, it could either reduce or increase your CIBIL score, or it could also affect whether you get approved or not. It is easier when you have a higher CIBIL score, which gives you much lesser expenses associated with the car loan that you apply for.
6) Make Bigger Down Payments
This might seem a little more old school than you had expected, but it is definitely a good choice to make. When you make a bigger down payment, the burden on your shoulders for the rest of the tenure will be much lighter than you know it. It might be hard to make bigger down payments, but the best part is that you will have much less to pay when it comes to the EMIs and the tenures.
7) Make Sure You Can Pay Up
Well, if there is one thing that you need to know about before you can take out a car loan, then that would be to know what you are capable of. When you know you can afford this EMI amount, only then can you opt for this loan. For this, you can also use an EMI calculator.
Perks When You Take a Car Loan
Taking out a vehicle loan to buy an automobile has a number of advantages, some of which are listed below:
If you take out a car loan and make on-time payments, your credit score will improve. A good credit score assures lenders of your ability to repay, which may result in them granting you lower interest rates or other benefits such as waived processing costs, etc.
Your auto loan can be repaid in easy equivalent monthly installments (EMIs), which you can pick but will be determined by the repayment tenure you select and the interest rate charged by the lender. EMIs alleviate the strain of having to pay a big sum of money towards loan repayment all at once. Instead, you can repay in smaller sums based on your ability to pay.
When you get a car loan, you don’t have to submit any collateral because the vehicle itself serves as one. The car would be hypothecated to the bank, and if payments are missed, the lender will have the ability to take the vehicle, auction it, and recoup the loan amount. You are not required to submit any additional security/collateral for a car loan.
On car loans these days, many lenders provide perks such as free servicing, free road tax, and so on. Though these extra benefits may not be the best reason to take out a car loan, they certainly won’t hurt!
There are quite a lot of things that you would have to consider when you apply for a car loan, and when you know those points – you need to know that you are in it for good.
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