Car is a prominent vehicle these days. More and more people prefer to buy a car, because of its affordable prices and the ability to provide comfort for traveling. The car also serves as a family vehicle for short trips. However, buying a car is not easy as you need to arrange finance for the vehicle at least up to 4 Lakhs. Therefore, a car loan is a solution for those who want to buy a car.
Manage Your Credit Score
The first thing you should do before applying for an auto loan is to review your credit report. A good credit score helps you to get a good amount of loans at low-interest rates. It also affects your monthly payments. Any errors or negative information in a credit report can keep you away from getting the car.
Know-How Much You Can Spend
Get a clear idea of how much you can spend (down payment and monthly payments) before you start looking at cars. Choose a car that comes in your budget and fulfill your and family needs.
The tenure of your loan will determine how much you pay now and how much it costs overall. Remember that short term loans come with higher EMI and a long term loan offers low EMI. It is suggested to take short term loans as the amount paid is small as compared to long term loans.
Before applying for the car loan, you should check the schemes provided by various banks and financial institutions. Check and compare the interest rates offered by the different banks. Choose a bank that offers the best scheme in terms of interest rates processing fees and other charges.
Avoid Prepayment Penalties
Your auto loan should also be flexible. Find a lender that will allow you to make extra payments or pay off the loan entirely without any penalties.
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