Are you not able to decide which car loan you should go for to buy your dream car? You must be looking for the one that will not strain you financially among the plethora of car loans available in the market. Take a look at a couple of tips that will help you to zero in on the best car loan out there.
1. Check your financial condition
The first and foremost thing you should do is checking your credit score. If you have a high credit score, the banks usually lend you money at a lower interest rate and you can easily avail auto loans. Hence you should try to improve your credit score to get a car loans at a cheaper interest rate and a longer tenure.
2. Decide the loan amount
This is a very important thing to consider. Car loans offered in the market range from as low as 1 lakh to 75 lakhs for imported cars. But, that does not mean you should go for the full value of the car as car loan. The value of a car decreases with time and so does its resale value. Therefore, you should consider how much down payment you can make, what the maintenance charges are and how much EMI you can pay based on your income and determine the loan amount accordingly.
3. Check the car loan interest rate
Usually the rate of interest on car finance varies between 8.4 to 13.5% depending on the automobile segment, loan tenure and loan amount. For a given car segment, select that loan which has the lowest interest rate keeping in mind the tenure in which you can repay the loan. Additionally, you should also check out whether the interest rate is fixed or floating. Floating rates are usually lower then fixed rates but fixed rates protect you against market inflation. So, think your requirements through and see if the rate of interest is something that complies with your plan.
4. Compare the charges in the loan
Apart from interest rate, there are other charges like pre-payment charge, processing charge associated with car finance. Processing fee varies from bank to bank and is usually between 0 to 2% of the entire loan amount. While some banks don’t have pre-payment and late payment charges, some do include them in the terms and conditions. Therefore, you must definitely look out for these and select the loan with minimal additional charges.
Buying a car is a huge financial investment and to make a decision that does not financially destabilize you is extremely important. Following these steps will help you in making the right choice for car loan.
1. Check your financial condition
The first and foremost thing you should do is checking your credit score. If you have a high credit score, the banks usually lend you money at a lower interest rate and you can easily avail auto loans. Hence you should try to improve your credit score to get a car loans at a cheaper interest rate and a longer tenure.
2. Decide the loan amount
This is a very important thing to consider. Car loans offered in the market range from as low as 1 lakh to 75 lakhs for imported cars. But, that does not mean you should go for the full value of the car as car loan. The value of a car decreases with time and so does its resale value. Therefore, you should consider how much down payment you can make, what the maintenance charges are and how much EMI you can pay based on your income and determine the loan amount accordingly.
3. Check the car loan interest rate
Usually the rate of interest on car finance varies between 8.4 to 13.5% depending on the automobile segment, loan tenure and loan amount. For a given car segment, select that loan which has the lowest interest rate keeping in mind the tenure in which you can repay the loan. Additionally, you should also check out whether the interest rate is fixed or floating. Floating rates are usually lower then fixed rates but fixed rates protect you against market inflation. So, think your requirements through and see if the rate of interest is something that complies with your plan.
4. Compare the charges in the loan
Apart from interest rate, there are other charges like pre-payment charge, processing charge associated with car finance. Processing fee varies from bank to bank and is usually between 0 to 2% of the entire loan amount. While some banks don’t have pre-payment and late payment charges, some do include them in the terms and conditions. Therefore, you must definitely look out for these and select the loan with minimal additional charges.
Buying a car is a huge financial investment and to make a decision that does not financially destabilize you is extremely important. Following these steps will help you in making the right choice for car loan.
No comments:
Post a Comment