Check these things before taking out a car loan. (Representative image/IANS)
Many people take out a car loan and the process involves several steps before the loan is approved.
More Indians preferred to have their cars financed in 2022, even as the average budget increased by 30%.
The CARS24 India mileage report 2022 says that more millennials were buying cars in 2022, with the majority of buyers under 35. This trend underscores that younger clients are driving the sector, and car financing options in the form of EMI have become more widely accepted.
At the same time, people are willing to pay more for cars without sacrificing choice, safety or quality.
Many people take out a car loan and the process involves several steps before the loan is approved. There are a few important things to consider before applying for a car/vehicle loan.
Also Read: EMI Is Preferred Choice For Salary Car Buyers For 6 Years: Report
The CARS24 report added that the average EMI in 2022 was Rs 11,500 and most of the loans were taken by salaried professionals.
What to check before taking out a car loan
There is a common consumer behavior to scrutinize every item purchased on the market, whether online or offline. This also becomes important when you are looking for money in the form of a loan. Just the thought that a lender is financing you doesn’t mean that you don’t have the opportunity to discuss all the details in detail before finalizing the agreement.
5 things to remember when taking a car loan
Loan amountA: The first thing you need to consider is the amount you need as a loan to buy a car. The lower the amount, the lower the tenure and EMI will be, as long as your availability is not affected.
Interest rateA: Compare the interest rate across all types of lenders to get a deal that suits your requirements and pay less interest.
AMYA: This is extremely important as you also need to manage other daily expenses. Fixing EMI by balancing other needs should be a well thought out task prior to completing a loan application.
Credit termA: When you evaluate the amount of the loan, you must also consider the term of the loan. At lower EMIs, less money may be deducted per month, but you end up paying more interest. Therefore, a less term loan is preferred by many.
See also: How to buy an apartment on credit? What to consider before taking out a home loan
Interest type– Fixed, floating or mixed rate car loans. In a fixed rate loan, the interest rate is fixed at the time the loan is taken. On the other hand, the floating rate or adjustable rate is linked to the lender’s base rate, which in turn changes in sync with the market interest rate and the RBI.
What else to check
PrepaymentA: Be aware of fees, restrictions, and other restrictions. Read the documents carefully to understand the fees and early repayment/foreclosure options on your auto loan.
One-time commission: check if there is a fee for processing a loan application.
CIBIL rating– Banks and other lenders check your CIBIL Score before a loan is approved. Lenders will consider your credit score when approving a car loan application.
Documentation: Check what types of documents the lender is requesting. Make sure you keep them ready for a smooth processing of your loan application.
Even after you complete the repayment/closure of the car loan, remember to take a detailed loan closure report, a no-objection certificate, and a repayment statement.
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Namit Singh Sengar Namit is Senior Associate Editor of News18.com Business Vertical. With over five years of experience, he focuses on personal finance, brands, and economics….Read More