Buying a car involves a significant amount of investment! Before finalising a vehicle, you should do a thorough research of various car models, their features and mileage, and finally, the mode of finance. Most people prefer a car loan rather than dipping into their savings, irrespective of whether it is a brand new car or a used one.
New age consumers take advantage of the various financing options available while buying a new or a pre-owned car.
Check Your Credit Score for Car Loan: Your credit score plays an essential role in deciding your eligibility and the loan offer. A good score, preferably 750 or above, ensures you get a lower interest loan, whereas a poor score results in higher interest charged or even rejection of the application. However, having a score below 750 doesn’t necessarily mean you won’t be able to get a loan. There are some banks and agencies that offer car loans depending upon the applicant’s profile.
Verify the type of Interest: The total cost of your car will be the car loan principal amount, plus the interest you pay over the period. Financial institutions offer a variety of car loan interest rates. There are 2 types of interest rates - floating and flat. Make sure you check and compare the rates offered by different lenders to get the best car loan deal. While it seems tedious to compare the car loan interest rates, it is a crucial task, as even a slight difference in interest rate can significantly impact on your repayment amount.
Decide on a fixed tenure: Once you have decided upon the car loan amount to borrow, the next step is determining the tenure. Based on the number of years you choose to repay the loan, you can calculate the EMI with the interest rate to know the affordability of the loan. Remember, while longer tenure seems to be a reasonable option, it comes at the cost of higher interest payment. Always opt for a lower loan repayment period to pay less interest.
Know about pre-payment offers: There might be instances where you manage to save a good amount over a couple of months, which you can use to repay and close your loan before the opted tenure. While this helps you save interest, but some lenders charge a foreclosure penalty that can hamper your finances even more. Consider a lender that doesn’t charge this penalty or has very nominal foreclosure charges.
Enquire about Car loan fees and charges There are certain charges applied on Car loans such as processing fees, stamp duty and more. Look out for any special offers on other charges to save on cost. Also, check, compare and only then enter into an agreement if you are satisfied with the terms.
Car Insurance: : Insurance is a must when buying a car. So, as you evaluate your car loan offer, assess the options for your car insurance with same diligence. To find the best deal for your car, research to compare and evaluate the various policies offered. You can also check out Poonawalla Fincorp Car Insurance.
Pre-approval car loan before purchase: Another option that some institutions like Poonawalla Fincorp provide is a pre-approval of your Car Loan. It assures you of credit even before you make the purchase, giving you the power to negotiate the prices and terms more confidently.
Buying a car is a major investment decision and so needs to be handled with care. That is why you must consider these factors before taking a car loan. As financial planning is a must while you opt for a car loan, you should check the best EMI plans in the market and ensure that you can repay the loan with ease. Now that you are well informed, you can choose the best car loan option available in the market and take a big step towards owning the car of your dreams.
Explore Poonawalla Fincorp Pre-Owned Car Loan offers if you have got your eyes on a car! Our simple loan application process and attractive features can get you your dream car.
Buying a car involves a significant amount of investment! Before finalizing a vehicle, you should do a thorough research of various car models, their features and mileage, and finally, the mode of finance.
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Taylor Abrams| December 07, 2022
Its important to be aware that there are costs associated with used car loans, like processing fees, stamp duty, and more. I will keep this in mind before I really decide on getting an used auto loan service.