Buying a car is fun, but taking a loan for the same is very tiring. The entire process of EMIs and loan repayment is very hectic and tricky. From scrutinising for best schemes to choose the repayment tenure, here are the top 5 things of consideration before you take a car loan.
Buying a car is one of the most important investments you make. It is considered second to buying a home for middle-class people. It is such a big investment that most people have to take out a loan for that. But car loans are not as simple as they might look. Loans accumulate much interest over a long period of time. Hence, it is of utmost importance for you to get prepared and know the minutest details before buying a car on loan. Here we bring you a list of things you must consider before applying for a car loan.
Compare the Loans of Different Lenders and Organisations
You should prefer to go to a reputed lending organisation for a loan as they make the legal paperwork and hence it gives you an assurance that your loan is guided. Given that there is no fixed rate of interest in the market, even the slightest change in percentages can lead to a big difference in the amount of money you’ll have to pay later.
As stated earlier, the rate of interest varies from lender to lender. You must get quotations from different lenders for the model of the car you wish to buy and then do the final comparison. The one quotation which gives you the desired values, go for that bank/lender.
Select the Loan Repayment Tenure Wisely
Once you have the loan, buying a car is not that difficult. What actually is problematic is the process of loan repayment. So, the repayment tenure is one of the most important factors to consider before buying a car on loan. Lenders and bank employees might trick you into getting a loan that isn’t good for your pocket. For example, you are shown a great plan. The interest rate is low, and you are to pay the EMI in instalments of, say, ten years. Sounds excellent, does it? But here comes the tricking part. If you calculate the amount of money you will have to repay in these ten years will be much more than a loan with a higher interest rate. Hence, it is only wise to choose that repayment plan where you are free from it in minimum years.
Precise and Complete Documentation
The Know Your Customer, often abbreviated as KYC, is followed by almost every lending association. You can’t get the loan accepted until and unless your documents are all verified and your credit card report is checked. Therefore, after you have decided to get a car loan, the first you should do is get all your documents ready. Verified and completed documentation promises faster processing of the car loan. Additionally, the fact that you have come prepared shall make you better positioned to bargain for your desired plans.
Calculate your EMI, Processing Fee and Foreclosure Penalties
These days there are a lot of websites on the internet which offer an EMI calculator to help to know your monthly repayment amount based on the interest rates. The calculation of EMI beforehand can allow you to figure out if that loan plan suits your financial situation or not.
This calculation will, hence, help you in choosing the best loan for you and your car. In the same way, you can also check the other payments related to the loan, like the service tax processing fee and foreclosure penalties, which many buyers are unaware of.
It is crucial for you to be aware of the important factors of a car loan. It is advisable that you get help from a loan official and do your own research simultaneously to get the best results.