5 things to consider before taking a car loan
Most people planning to buy a car in India will be getting a car loan. Getting a car loan may seem easy considering the huge number of banks available, but it may not be so in reality. Here are some of the things you should know about getting a car loan.
- What’s your credit score?
Knowing what your credit score is and how it can affect your car loan is a good thing. The better your credit score is the better deals you are going to get. Your credit score is simply a number that measures your credit-worthiness. So if you have a low credit score, you will get a higher rate of interest and if you have a high credit score, your rate of interest will be lower.check you CIBIL score here
- Prevalent interest rates.
As someone shopping for a car loan, you need to know what the prevalent loan repayment interest rates are in the market. There’s no fixed rate available and even a small percentage of difference of what two banks are offering can mean a significant change in your car EMI. So pay attention and start comparing interest rates.calculate your EMI here
- Get your documents ready.
You need to be prepared and the first thing you need to do is get your documents ready. Be assured that you will be asked for a variety of documents including your identity proof, address proof, salary slips of the few months and even your income tax proof. If you have credit cards in your name, you may also be asked for the latest statements.
Having the documents ready at hand will ensure that you can submit them to the banks as and when they ask.
- Try getting quotations from as many banks as possible.
It is a good thing to get quotations from as many banks as you can for the simple reason that it will help you compare your options better.
- The loan repayment period.
This is an important thing to consider. The time period you are going to use to repay the car loan makes a significant difference. Why? The truth is that car sales executives will try to push you towards choosing the 7-year period because that is how they are going to enjoy the highest incentives.
You may be lured into thinking that the highest loan repayment period is the best because it lets you pay a lower EMI. But calculate and you will know that you will be making a higher payment by doing so. So choose the lowest period you can manage.
Always ask about processing fees before submitting a loan application. The rate of interest may be low but if you have to pay a significant amount of money as processing fee, you are not really doing yourself a favor.
Apart from the above, there are lots of nitty-gritty’s about getting a car loan in India. What you should do is keep your eyes and ears open, do as much homework as you can and then submit your loan applications. You can also compare your interest rate on car loan provided by different banks here