Things to Know Before Taking a Car Loan
People now-a-days are in a hurry to buy used or new cars. They want to change their car every 3 to 4 years. One can either go for a used car or brand new car. There are so many options available about which car to choose that one tends to get confused.
But the one thing that people take up leniently is carefully studying the financing options for the car. For finding the best deals, careful analysis should be done. Here are a few tips:
1. Down Payment
Mostly banks will offer 85 to 90% financing on the on-road price of the car. A Privileged or an old customer may get a 100% financing option. Try to keep your down payment as high as you can afford as it will help you to keep your EMIs and interest component low.
2. EMI and Loan Tenure
Your EMI and loan tenure will depend on the amount of down payment that you make and loan needed. To keep the EMI and Loan tenure low, one needs to keep the down payment as high as you can afford.
3. Interest Rates
The current interest rates on a Car loan for most of the banks is around 10 to 11%. Most of the banks offer fixed interest rates on car loans. One can go for floating rates, but these rates will vary if there is a change in policy and bank rates may move up and down. So choose carefully.
4. Foreclosure Charges
Always consider what kind of foreclosure charges that you have to pay in case you are not able to pay back the loan.
Check your credit-worthiness by checking your CIBIL score. A higher score means a better chance of loan approval. One will have a probability of 90% approval of the loan if he/she has a score above 700.
So go for a car loan and don’t delay buying your dream car. Just consider these few points and make your choice accordingly.