A decade ago, four-wheelers were recognized as the status of royalty, but in the ongoing scenario, four-wheelers have become a symbol of necessity. In the ongoing pandemic, public transportation is considered a challenging issue, so many people are switching their gears towards the private automobile. A car loan is a decent option for an individual for buying a car. But in the ongoing financing sector, it is tough to find the right lender for yourself to purchase a vehicle. So, whenever opting for such loans, try to measure some aspects like interest rate, tenure, EMI, and other charges before applying for such loans.
5 Factors to consider while opting for such loans
Below are some factors that an individual should consider while opting for a loan:
-
Interest rate:- The interest rate is an important factor to evaluate your exact monthly installments and the final cost of the vehicle you want to purchase. Various financing institutions are offering a decent amount of interest rate on vehicle loans. Make sure to go for the best interest rate in the market rather than engaging yourself in any prepackaged deal.
-
Down payment:- The down payment is some fixed amount from the overall amount of vehicle that the borrower has to provide to the lender at the time of vehicle loan. The higher the down payment you opt for, the lesser monthly installments you have to pay every month. Try to compute your overall EMI using a car loan EMI calculator.
-
Processing fees:- When you opt for a loan request, the bank/NBFC will charge you with some amount of loan processing fees. Generally, the loan processing fees vary from bank to bank where some lenders offer flat loan processing fees, while others fix the processing fees based on the amount of the loan and a fixed percentage used to evaluate the fees.
-
Credit health and eligibility:- Whenever you apply for a loan, monitor your ongoing credit health as well as your loan eligibility criteria. Nowadays, due to the increase in the number of loan defaulter, the lenders have become strict on the borrowers’ credit health. So try to maintain a CIBIL score of 750 or above to reduce the chances of the loan rejection.
-
Foreclosure charges:- When a borrower opts for prepayment of such a loan before the tenure ends, the bank/NBFC charges some extra amount. Loans like Karnataka Bank Car Loan offers a pretty decent foreclosure charge.
Having a private vehicle can make your life more convenient than traveling in a DTC bus. You can play a dream vacation with your family even without thinking about a travel agency. However, try to opt for such loans when all your necessary needs are already fulfilled.
