10 Jun 2019 04:20am IST
Neetant D Sinai Shirodkar
With the rise in income over the years, owning a car is no more a status symbol. While some prefer public transport or cabs, having one car in a family is no longer a novelty. For most of the people, it’s also related to their professional growth. The higher one grows in his/her career, the higher the aspirations such as a car, house, etc. Money isn’t a restriction anymore as banks, as well as finance companies, are offering easy financing. As compared to earlier years, buying a car is now relatively easy owing to various financing schemes that are offered by banks and other financialinstitutions.Getting a car loan to finance your vehicle isn’t a hassle anymore as you will often find a bank representative within the car showroom. In case you fulfil all the eligibility criteria, you’re furnished up to 85% to 100% of the total cost as the loan. Listed below are some of the points which you should bear in mind when going for a car loan.
Know your Credit Score:
A credit score is a statistical number that evaluates a consumer's creditworthiness and is based on credit history.Lenders use credit scores to evaluate the probability that an individual will repay his or her debts. A person's credit score ranges from 300 to 850, and the higher the score, the more financially trustworthy a person is considered to be.Your Cibil or credit score is the most important factor which determines what type of loan you would be able to secure from any lender. Whether you are going through financial institutions, auto loan dealers or with the dealership itself, the interest rate would depend on it. Better the score, better the chances of getting a lower rate of interest on your loan.
Sometimes, securing a car loan isn’t that easy. Banks and other financial institutions follow KYC (Know Your Customer) norms for the purpose of granting loans. And they go through and verify several papers and past credit history, you must have all the required documents at your disposal. Some of the documents which are commonly asked include income proof, address proof, bank statement, PAN, income tax return statements of previous financial years, credit card statement, etc.
Equated monthly instalment (EMI) Calculation:
Today, free car loan EMI calculators can be found over the web or as an App on your mobile. They help you to plan your monthly EMIs. One aspect to keep in mind is that when you calculate your EMI with the help of car loan EMI calculator, use the agreed interest rate and then decide on the choice of funding.
Loan Repayment: Most of the lenders today, offer flexible repayment period which stretches from 1-7 years. Borrowers could choose the loan repayment period as per their convenience. Borrowers also have the option to prepay their loan obligation.
Prepayment conditions and Fineprint:
When you’re taking a car loan from any bank never forget to check the foreclosure penalty details. It is something which most of the car buyers aren’t aware of. If you repay your loan obligation in a lump sum before the repayment period, your bank might charge a prepayment penalty on the remaining loan amount. Banks have different prepayment penalty rates, so it’s advisable to check it beforehand.
Before zeroing on your car loan, it’s imperative for you to do your homework. In case you’re a first-time car loan applicant, the process might seem very confusing. There would be a lot of words thrown in your loan application; make sure that you understand the intricacies of what is provided in there.You must put in your share of work for ensuring that you find the best possible loan deal; while avoiding the mistakes which most of the people make. Hope, the points mentioned above could help you in securing a better car loan deal without any hassles.