Most of us aspire to get our dream car, but quite a few have the funds to make that dream come true. Car finance bridge this gap by helping you to finance your dream car by paying a fraction of its cost. As compared to earlier times, purchasing a vehicle of your choice is rather easy these days, all credit goes to the various financing schemes offered by banks and financial institutions.
If you are planning to apply for a car loan, consider this checklist to go through before buying a car loan.
1) Comparison:
Car loan interest rates vary as per your car model, repayment capacity, employer, etc. Few banks also offer preferential interest rates to their existing customers. Hence, first check with your existing bank for such offers and then visit online lending marketplaces to compare them with the prices offered by other lenders.
2) Check your affordability:
Loan amount and the tenure of loan decides the EMI amount, in addition to the rate of interest payable. You can check your EMI affordability by deducting the necessary monthly expenses, existing EMIs, insurance premiums and SIP contribution from your monthly income. Lenders usually prefer total loan EMIs to be within 40 per cent of your net monthly income. While a higher EMI will surely lead to lower interest cost, don’t do it at the expense of your emergency fund or your investments. When you apply for a car loan online, try to calculate your EMI amount on the digital calculators.
3) Loan tenures:
The shorter loan tenure is always better for car loans. Most banks provide car loan duration for up to seven years. You can try to opt for a shorter tenure as it will reduce your interest cost. However, know that a shorter tenure will lead to higher EMIs. Before accepting the auto loan, ensure that your tenure does not cost your overall contributions to various life goals.
4) Credit score:
Generally, lenders consider your credit score while approving your car finance application. Typically, those with credit scores of 750 and above have a greater probability of loan approval. So get your free credit report from online lending marketplaces or credit bureaus before filing a loan application. It will let you know your credit score beforehand and help you take corrective steps to improve it. Additionally, you may also receive pre-approved car loan offers based on your credit score and other eligibility parameters.
If you are planning to apply for a car loan, consider this checklist to go through before buying a car loan.
1) Comparison:
Car loan interest rates vary as per your car model, repayment capacity, employer, etc. Few banks also offer preferential interest rates to their existing customers. Hence, first check with your existing bank for such offers and then visit online lending marketplaces to compare them with the prices offered by other lenders.
2) Check your affordability:
Loan amount and the tenure of loan decides the EMI amount, in addition to the rate of interest payable. You can check your EMI affordability by deducting the necessary monthly expenses, existing EMIs, insurance premiums and SIP contribution from your monthly income. Lenders usually prefer total loan EMIs to be within 40 per cent of your net monthly income. While a higher EMI will surely lead to lower interest cost, don’t do it at the expense of your emergency fund or your investments. When you apply for a car loan online, try to calculate your EMI amount on the digital calculators.
3) Loan tenures:
The shorter loan tenure is always better for car loans. Most banks provide car loan duration for up to seven years. You can try to opt for a shorter tenure as it will reduce your interest cost. However, know that a shorter tenure will lead to higher EMIs. Before accepting the auto loan, ensure that your tenure does not cost your overall contributions to various life goals.
4) Credit score:
Generally, lenders consider your credit score while approving your car finance application. Typically, those with credit scores of 750 and above have a greater probability of loan approval. So get your free credit report from online lending marketplaces or credit bureaus before filing a loan application. It will let you know your credit score beforehand and help you take corrective steps to improve it. Additionally, you may also receive pre-approved car loan offers based on your credit score and other eligibility parameters.
Do you need quick funds for your business but cannot repay immediately? Get merchant cash advance funds and repay small amounts when there are credit sales.
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