Apart from buying a home, buying a car is also another big investment one can make in a lifetime. In this case, it is always safer if one can pay with cash than any other forms of payments. However, due to many unavoidable circumstances, one might need of a car but has no cash. In this instance, most people opt for loans so as to acquire the car. Buying through loans can be applied in either case; when a car is old or new. We all know that loans accumulate interest as you pay back over time.
This article stresses the most important tips you need to consider before availing a car loan.
1. Ensure That The Car Loan EMI Fits Your Monthly Budget
As the loans law always states, the amount you borrow is what will determine the number of interests to pay over the loan term. The cost of the loan is usually same regardless of the loan term or amount. In this case, what actually increases is the total interest. This normally varies as it can sometimes increase with either the loan amount or the term. The loan payment procedure is always determined by one’s choice. One can decide to take a low loan amount hence end up giving a down payment. In other cases, one can take a shorter loan tenure which as a result, leads to higher payment through the EMI.
2. Check Your CIBIL Score
Prior to applying for your car loan, it is crucial that you should first throw an eye to your CIBIL score. In this case, the rate of your CIBIL score at that particular time is what determines your ability to get a loan. If you happen to have a poor score, then chances are that you might not be granted access to the loan. And depending with the value of cars one has to be with a CIBIL score of greater than 750 so as to be authorized on loan application.
3. Understand Dealership Financing
Dealership financing can be very attractive in some ways. For instance, deals that reduce the total amount of loans can be a big deal to car loan application. This includes deals such as the 0% financing and large cash returns. Financing options, in this case, highly favors the top qualified buyers. It is, therefore, a turn down to those applicants with low FICO score and limited credit experience. So, if you must have a car and it’s through a loan, you need to carefully look into what it takes before you can make a move.
4. Processing Fee
The lesser the processing fee the bigger advantage to you as a borrower. One can negotiate with the bank on many factors regarding what to pay for loan processing. In most cases, the fee ranges as from Rs 2000 to Rs 5000. This is, however, determined by the amount of loan that one borrows at a particular time. Avoid loans during festive seasons as they are always with higher interest rates.
Car loans are just short term loans. For that matter, the more they go down the more advantageous they become to the borrower. This is because, in most cases, interests are always at their best levels. However, when applying for the car loan, it is not commendable that you go by interest rates alone, but also consider other subsidiary charges. Therefore, it can be vital if you take time to think before applying for one.