Steps to select a suitable car loan!

By | December 10, 2012

The basic purpose of availing a car loan remains to make good the deficiency in available funds to buy a car. If one is systematic and methodical in deciding on the right car loan to suit the exact requirements then the chances of getting a great deal that will save substantial amount in the long run is quite high. Described below are some of the essential steps to get a smart car loan.

Step 1 – Identify your Needs


The first step in this direction is to list out the requirements as you perceive from the car.

  • Do you need a new or a used car?
  • What size and segment of car are you looking at?
  • What is the total budget that you can afford towards the car?
  • Do you want a sedan, sports or multi-utility car?
  • What safety features do you desire in the car?
  • What kind of maintenance and fuel consumption is suitable for your envisaged usage of the car?
  • How much EMI can you afford from monthly income?

Step 2 – Select the Car


Having identified your needs look around for the right car that suits all your needs. Reading through online car reviews help in arriving at a more informed decision. Visit dealers to get a first hand feel of the car that you are looking at through a free test drive.

Step 3 – Select the Loan


Now that the most suitable car has been selected the next activity is to find out the best car loan from various financiers. The dealers would have given a fair insight into all kinds of financing available and the discounts that they are willing to offer on those loans. While studying the car loan schemes of different financiers the following points have to be considered:

  • What is the interest rate offered?
  • What is the down payment being asked for?
  • What is the minimum and maximum tenure that the bank is stipulating for the loan?
  • What shall be the EMI in various combinations of loan amount, interest rate and repayment tenure?
  • What are the other additional charges such as processing fee and prepayment penalty?
  • What allied dealer discounts are being offered by each of the financier?
  • What margin of negotiation is available with each financier?

Step 4 – Choose the Interest Type


Once a financier has been selected the next logical step is to decide whether you want an unsecured car loan with floating rate of interest or a secured fixed rate of interest on the loan. It has been seen that usually it is the fixed secured loan that results in overall lower payments in the long run though the dealers and bankers will advocate otherwise.

Step 5 – Check Credit Score


In today’s scenario one must first check out his credit scores online before applying for any loan since this will help avoid rejections which could adversely affect future ratings.

Once you have seen the exact eligibility as per your credit rating you van now go ahead and apply for the car loan that you have short listed to bring home your object of desire proudly.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit for the latest rates/offers.

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