Imagine, after a long day at work you stand in sweaty buses or wait in long queues at the ticket counter to later get crushed by local train commuters. Not the ideal way to end your day, right? People want luxury in whatever activity they indulge in. Come on, who does not want the comfort of cushioned seats and air-conditioned cars? And since you are looking for these features, it is best to invest in such vehicles by paying monthly instalments instead of spending a large chunk of your savings.
A car loan allows you to do so. Choosing the right kind of loan is pretty daunting. Dealers assure you of best rates, SMS offers, etc. making you all the more confused. Those who earn mid-level to high-level income can opt for a car loan. However, many lenders receive finance add-on options from their dealers once the application is made.
Here are 6 misconceptions regarding car finance that should be avoided at the time of purchasing one:
1) The 100 per cent financing factor: Dealers generally assure 100 per cent financing. It means the loan will cover the entire cost of the automobile. That is usually not the case. If dealers make such assurances, that will incur a higher rate of interest. At the most, financial institutions provide 80-85 per cent financing. This happens for those who share a good bond with their banks and finance companies.
2) The 0 per cent interest rate claim: Most of the car dealers these days offer 0 per cent interest rate. However, an interest-free loan has its share of issues. The interest-free loan comes with a minimum tenure of 3 years, which does not provide sufficient financial flexibility. In the process, down payment may also increase. In case the dealer does offer 0 per cent interest rate, ensure he/she does not apply extra charges on other aspects of the loan.
3) Buy a new car to obtain car loan: If a new car brings more benefits to the dealer, he will try to sell it at any cost. However, used cars which is not driven for more than 1-2 years, may work out as well while costing a less. Many banks such as HDFC, SBI offer loan for a used car. Just ensure the manufacturing date coincides with the lender’s pre-parameters.
4) Get loan via dealer or face rejection due to poor credit score: Another myth with regards to car finance is credit score. No, your credit score does not get affected due to a car dealer. In fact, these loans hardly get rejected as they are secured, where your car acts as your collateral. The dealer might consider additional factors such as level of income, employment history, etc.
5) Apply via car dealer for lower interest rates: When you apply for a car loan via the dealer, you are directly in touch with the seller and not the financial provider. To get the best deal, you will have to take some effort and do a comparative study. Another best way to get a suitable loan is to look out for a financial websites that provide offers from different banks under one roof.
These myths sound shocking, isn’t it? Debunk them and understand the reality which will help you make smarter financial decisions in the future.
A car loan allows you to do so. Choosing the right kind of loan is pretty daunting. Dealers assure you of best rates, SMS offers, etc. making you all the more confused. Those who earn mid-level to high-level income can opt for a car loan. However, many lenders receive finance add-on options from their dealers once the application is made.
Here are 6 misconceptions regarding car finance that should be avoided at the time of purchasing one:
1) The 100 per cent financing factor: Dealers generally assure 100 per cent financing. It means the loan will cover the entire cost of the automobile. That is usually not the case. If dealers make such assurances, that will incur a higher rate of interest. At the most, financial institutions provide 80-85 per cent financing. This happens for those who share a good bond with their banks and finance companies.
2) The 0 per cent interest rate claim: Most of the car dealers these days offer 0 per cent interest rate. However, an interest-free loan has its share of issues. The interest-free loan comes with a minimum tenure of 3 years, which does not provide sufficient financial flexibility. In the process, down payment may also increase. In case the dealer does offer 0 per cent interest rate, ensure he/she does not apply extra charges on other aspects of the loan.
3) Buy a new car to obtain car loan: If a new car brings more benefits to the dealer, he will try to sell it at any cost. However, used cars which is not driven for more than 1-2 years, may work out as well while costing a less. Many banks such as HDFC, SBI offer loan for a used car. Just ensure the manufacturing date coincides with the lender’s pre-parameters.
4) Get loan via dealer or face rejection due to poor credit score: Another myth with regards to car finance is credit score. No, your credit score does not get affected due to a car dealer. In fact, these loans hardly get rejected as they are secured, where your car acts as your collateral. The dealer might consider additional factors such as level of income, employment history, etc.
5) Apply via car dealer for lower interest rates: When you apply for a car loan via the dealer, you are directly in touch with the seller and not the financial provider. To get the best deal, you will have to take some effort and do a comparative study. Another best way to get a suitable loan is to look out for a financial websites that provide offers from different banks under one roof.
These myths sound shocking, isn’t it? Debunk them and understand the reality which will help you make smarter financial decisions in the future.
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