In today’s world, owning a vehicle is more of a necessity than a luxury. The Indian markets see new car models launch each day and, whether it is an upgrade, or buying another car for the family. no matter be the reason, a car loan makes it easier.
However, before you choose a car loan you should know the processing fee and the interest charged by different banks. Typically, car loans are issued for a tenure of up to 5 years however some lenders like a bank of India and Punjab National bank issue car loans for up to 7 years. A longer-term car loan reduces your EMI your overall value of the loan goes up because of higher interest.
While selecting a car loan, remember, if you’re taking a car loan for a long period, the EMIs are going to be huge and non-payment can mean a blot on your credit report.
Fetch your credit report
car loan interest rates are set by parameters like financial income, gender, and credit score. If you have a high financial income but a poor credit score, your loan rate should still be high. Lenders fetch the credit reports of auto loan candidates to check their trustiness.
Ensure to check loans available from different lenders
Lenders approve loan applications and set their interest rates totally on the idea of their value of funds and credit profiles of the candidates. this could result in a different interest rate for the same type of loan. Hence, it’s necessary to check the loan options from different lenders to land with the simplest loan offer.
Assess your EMI affordability
Check your EMI affordability by deducting all necessary monthly expenses, like house expenses, existing EMIs, insurance premiums, and SIP contributions for crucial money goals from your monthly financial interest. keep in mind that almost all lenders like your total EMIs, as well as the new car loan EMI, to be up to 40% of your monthly financial gain. Once you’re responsive to your EMI affordability, like a shorter tenure as that may scale back your interest value.
Do not ignore the processing fee
The processing fee of your car loan will go up to Rs 10,000. whereas several lenders remove their process fees throughout festival seasons, ensure that you don’t seem to be being charged a higher rate or any other charges to form up for the concession or release of the processing fee.
Check pre-payment charges
Making prepayment of your car loan will facilitate in reducing your interest value. However, several lenders have prepayment charges on car loans Lent on fixed-rate loans, which may go up to 6% of your outstanding loan principal.