For most of us, the first big loan we ever take is usually a car loan. Affording a car has become easy thanks to these easy, minimal documentation car loans. Like the name suggests, car loans are sanctioned only for the purpose of purchasing a car. Since these loans are smaller in amount as compared to say a home loan or a business loan, the loan periods are relatively of shorter durations than the aforementioned loans and the loan amount also tends to be comparatively smaller.
Factors to consider before applying for the loan
Before applying for a car loan, you must check whether it fits into your budget. You must consider aspects like the amount you require, the tenure your need and the interest rate you can afford. You can find out everything about this, before even applying for a loan, simply by using a car loan EMI calculator that is available on most lender websites.
What does an EMI calculator look like?
An EMI calculator tool, typically has the following three factors
Principal: You must input the principal amount of the loan you wish to borrow e.g. ₹500,000, after considering the amount you can pay as down-payment.
Tenure: Input the details of the tenure you wish to repay the loan in e.g. 5 years. Car loans generally range from 1-7 years.
Rate of Interest: Finally, you must input the rate of interest you can afford. Unlike home loans, car loans usually have fixed rates of interest which means, you will be charged a flat, single interest rate throughout the tenure of the loan, (5 years for example) regardless of the conditions of the market. Your Equated Monthly Instalments (EMI) while remain the same, month on month until the loan is repaid.
Monthly EMI: After inputting these details in the EMI calculator for car loan, you will find that you will have to pay a monthly EMI of ₹10,624.
Availing the best interest rates on the car loan
One thing you must keep in mind to be eligible for good rates of interest is that you need to have a good credit score. Before meeting with a bank to apply for the car, it is a good idea to obtain a report of your credit score. You can also find websites that help you find your credit score, the links for which are also available on your car loan EMI calculator web-pages. Your chances of being offered great terms of the loan as well as lower rates of interest, along with a big loan amount are heightened, if you can show a credit score of 750 points and above. In case your credit score is less than 750 points, you could wait to improve the score and then apply for your loan which can decrease the chances of your loan being rejected.
Factors to consider before applying for the loan
Before applying for a car loan, you must check whether it fits into your budget. You must consider aspects like the amount you require, the tenure your need and the interest rate you can afford. You can find out everything about this, before even applying for a loan, simply by using a car loan EMI calculator that is available on most lender websites.
What does an EMI calculator look like?
An EMI calculator tool, typically has the following three factors
Principal: You must input the principal amount of the loan you wish to borrow e.g. ₹500,000, after considering the amount you can pay as down-payment.
Tenure: Input the details of the tenure you wish to repay the loan in e.g. 5 years. Car loans generally range from 1-7 years.
Rate of Interest: Finally, you must input the rate of interest you can afford. Unlike home loans, car loans usually have fixed rates of interest which means, you will be charged a flat, single interest rate throughout the tenure of the loan, (5 years for example) regardless of the conditions of the market. Your Equated Monthly Instalments (EMI) while remain the same, month on month until the loan is repaid.
Monthly EMI: After inputting these details in the EMI calculator for car loan, you will find that you will have to pay a monthly EMI of ₹10,624.
Availing the best interest rates on the car loan
One thing you must keep in mind to be eligible for good rates of interest is that you need to have a good credit score. Before meeting with a bank to apply for the car, it is a good idea to obtain a report of your credit score. You can also find websites that help you find your credit score, the links for which are also available on your car loan EMI calculator web-pages. Your chances of being offered great terms of the loan as well as lower rates of interest, along with a big loan amount are heightened, if you can show a credit score of 750 points and above. In case your credit score is less than 750 points, you could wait to improve the score and then apply for your loan which can decrease the chances of your loan being rejected.
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