Ajitesh, a regular guy in his twenties, wanted to buy a new car to impress his girlfriend and colleagues. He even ensured that he got everything right when it came to applying for a car loan. He selected the right car, applied for a car loan just in time and ended up fulfilling his dream pretty quickly. Just like Ajitesh, you too must keep your eyes open when looking for an ideal auto loan. By researching about the various loans offered by different banks and financial institutions, you’ll give yourself a great chance to fulfill your lifelong dream of buying a luxury car without the need to borrow money from family or friends. Due to the rising demand for automobiles in India, the car loan market is flourishing day by day. In order to make the right decision regarding a suitable car loan, you need to consider a number of factors beforehand.
Rate of Interest
The most significant factor to be considered when choosing a suitable car loan is the rate of interest charged by different banks. You shouldn’t just apply for a car loan with any bank. Instead, you must research carefully regarding the rates charged by the top banks, both government and private, in the country. This will help you in finding the most affordable deal for getting an auto loan. Most of the public sector banks are known to charge a lower amount of interest from the borrowers and hence you could consider applying for a loan with them. However, never limit your options if you are on a strict budget.
|Banking Institution||Interest Rate (%)|
|Magma Fincorp||10.75% to 12.00%|
|Kotak Mahindra||11.50% to 13.50%|
|HDFC Bank||10.75% to 12.50%|
|ICICI Bank||11.50% to 17.00%|
As on 25th February, 2014
Always keep in mind that a bank won’t sanction your loan unless you are found eligible for it. The eligibility factor always comes into play when you talk about a loan, be it home, car, personal or any other, getting approved. So, you must maintain a good credit score and show your monthly salary through documents. Do all the calculations you need to before applying for a loan. If you wish to check and improve your credit score, you could visit the website CIBIL.
How Much EMI Do You have to Pay?
EMIs and down payments are two of the most important aspects of buying a car loan and you need to keep a track of the money you’re going to pay to the bank. Don’t fall for the trap of lucrative offers and packages being offered by various banks. Instead, you must go through the terms and conditions of the loan to check if there are any kinds of extra charges or processing fees that you’ll have to pay from your pocket. For a smart purchase, every borrower needs to evaluate the car loan deal properly.
What are the Foreclosure Charges?
Whenever you have some additional cash, you can use it to pre-pay the auto loan or even foreclose it. However, one needs to keep in mind that not all the banking institutions offer you this service. Most of the banks that do, charge a certain amount of fee and it’s better to know the fee well in advance so that you can plan your expenses accordingly. Foreclosure charges contribute towards the overall cost of the loan and, therefore, you must ensure that it is as low as possible.
Try and Get a Short-term Car Loan
A lot of people would say that going for a short-term car loan is a suicidal decision as you’ll have to pay a large chunk of money every month as the EMI. However, when you go for a short-term loan, you are actually building your equity quickly. Every payment which you make reduces your principal amount and you end up paying much less in the long run.
Try Getting an Insurance Cover in Tandem with the Loan
Some of the banks also offer the facility to get car insurance along with the loan. This is a bundled deal that could save you a lot of bucks. You just need to submit your papers for getting insurance when you apply for auto loan with the bank.
One needs to be a smart buyer and ensure that you don’t navigate through the entire car loan procedure alone. Try getting some assistance from a friend or colleague who has some experience about getting these kinds of loans. If you want to apply for auto loan, you could visit https://www.bankbazaar.com/car-loan.html.