Buying a car — new or second hand — is always an exciting time. It gives one a new sense of freedom, independence and achievement, doesn’t it? And, what makes this purchase even better is the easy availability of a car loan. But, here is the downside of something easy and simple — confusion. More often than not, car showrooms offload you with so much information like loan package offers and so on that you may be lost and confused about your car loan. So, to simplify this process and to keep up your car buying excitement, we have listed 5 key things that you need to look out for before taking the loan:
RuLoansWatchOut # 1. Understand The Rate of Interest:
As you are aware, the rate of interest will impact the final cost of your car. So, look around and check the best rate of interest offered by various banks and financial institutions.In addition to various rates offered by banks, interest is also affected by the differencein floating to flat rate. Here, even the slightest difference in points can make a huge impact on the price of the car. Thus, it’s key to ask to as many questions as possible when it comes to interest rate.
RuLoansWatchOut # 2. Look Out For Processing Fee:
Loan companies and banks always charge a loan processing fee. This calculation again is different for each bank and institution. For instance, some banks may have a flat or fixed loan processing fee, while some calculate the fee based on the loan amount. This calculation is based on a fixed percentage. Also, when checking on processing fees, one must ask questions regarding charges for delay in paying the EMI and so on. Further, it’s important to know if there is any service tax,and if it’s a one-time lump sum amount or one needs to pay on a year-to-year basis.
RuLoansWatchOut # 3. Focus On Down Payment:
It’s always good to make a huge down payment on the loan. This way you pay interest on a smaller amount borrowed from the bank. In any case, banks usually ask for a 15 to 20 percent of the overall loan amount as down payment. So if you pay a higher down payment at the start, you not only reduce your loan amount, but also effectively lower the monthly EMI.
RuLoansWatchOut # 4. Check On Foreclosure Charges:
Most loan takers miss out on foreclosure details. Foreclosure happens when you decide to clear the loan by paying a lump sum amount before the actual closing period. And, in such cases banks tend to charge a foreclosure penalty on the remaining loan amount. Just like rate of interest, the foreclosure charges vary from one bank to the other; so choose wisely.
RuLoansWatchOut # 5. Follow-Up On Your Credit Score And Eligibility:
Yes, car loans are relatively easier to get. But, even in this case it’s key to ensure that you have a good credit history and that you meet all the criteria. For, keeping up the possibility of frauds and loan default scenarios, banks usually ask for details like monthly take home salary or annual income or income tax returns.For the loan borrower, keeping a tab on eligibility and credit history, also helps in filling out all KYC (know your customer) documents, and other details like bank statement, valid address proof, photo id proof, credit card statement and more.
Ruloans Tip :
Don’t forget to get quotations and look out for deal offers from various car showrooms, institutions and banks.These offers come with incentives like free insurance and so on.
Finally, to know more about car loans or to apply for a loan, leave your details here and our executive will get back to you at the earliest.