New Automobile on Your Thoughts? Know These 5 Issues About Automobile Loans

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Do not worry because there are car loans available to help you buy a new car. It adds the deficit amount and lets you enjoy the prospect of a new car. However, there are few things that you may consider before opting for a car loan:

Interest Charged on the Loan and CIBIL Score

Before taking a car loan, you must check the rate of interest on the selected car loan. It will enable you to decide on your monthly EMI outgo. The car loan interest rate varies from bank to bank. Hence, it is wise to compare different banks’ interest rate offerings to get the best deal. A lower interest rate means a lower EMI and a lower amount of interest to be paid.

Having a good credit score will also help you get a good deal. Generally, banks require applicants to have a credit score of at least 700. It would be best to check your CIBIL score to ensure that you are eligible for the loan.

Processing Fee Expenses

Usually, banks charge a processing fee when you take a car loan. It is the percentage of your loan amount that banks charge for processing the loan. It differs from bank to bank. Sometimes, banks waive off your processing fees. However, you should be cautious and check that no other expenses have been introduced or if there is a higher rate of interest that has been charged.

Know the Pre-Closure Expenses

In some cases, the banks levy a pre-closure or a pre-payment charge for a car loan. While selecting a bank, it would help to check about the pre-payment charges. It will also be beneficial to read all the documents to avoid falling prey to any hidden charges. You should ensure that you are not being penalized unnecessarily in the event of clearing your debt before the end of the loan tenure.

Down Payment

Nowadays, car loans are available for up to 100% of the ex-showroom cost of the car. While it might appear to be a great and attractive option, it also means that you will have to pay higher EMIs to clear the debt. Instead, when you opt for a car loan, try to arrange for a down payment, which will keep your EMI cost lower. Also, it is advisable to opt for a shorter tenure to reduce your interest cost. It may mean higher EMI’s, but you will able to clear the debt faster. Make sure to take a car loan only after you have saved enough for the down payment.

Make Sure Loan EMI Stays Within Payable Limit

A significant factor that you must check before taking a car loan is EMI affordability. It is crucial that you assess and calculate all your expenses before taking a call on how much car loan EMI you can afford. A wise decision would be to make sure that your car loan EMI along with any other existing EMI’s do not cross a majority percentage of your monthly income. You can choose to close any unwanted loans before applying for a car loan to ensure that you stay below the threshold limit. It will allow for easy repayment without facing a financial burden.

Choose the Right Financial Institution

Although car loans may be readily available, it requires careful selection. It is extremely essential to keep the things mentioned above in mind before you opt for one. After that, you may explore the options online and choose a bank that offers a fair deal. You can opt for reputable banks like Axis Bank that offers new car loans from 1 lakh up to 100% on-road price. Explore the website and learn about the benefits that they offer. They also have a dedicated team of customer service that will be happy to help you.

Fulfill your dream of owning a car today!

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