Get your credit report before making the loan application
While assessing a car loan application, banks check your credit report to evaluate your creditworthiness. Numerous banks likewise offer pre-approved car loans dependent on your credit score. For the most part, individuals with a CIBIL score of 750 or above have a superior possibility of loan approval. A few moneylenders additionally charge lower interest rates to those having a higher credit score. Accordingly, get your credit report from the credit bureaus or online money lending department websites, in any event, a half year before applying for the car loan. This will permit you to check your credit score in advance and give you an adequate opportunity to take restorative measures for improving your credit rating. Earlier fetching of your credit report will likewise permit you to recognize errors and fraudulent exchanges, which once redressed may improve your CIBIL rating and, subsequently, your loan eligibility.
Look at interest rates, Banks
Interest rates on car loans can be anyplace somewhere in the range of 8.80% and 16%, depending upon the bank, car model year, repayment capacity, CIBIL rating. Numerous banks additionally offer particular interest rates to their account holders. Thus, first check with your current banks about their car loan offers assuming any. Then, visit online websites to discover the best proposals from different moneylenders based on your pay, credit score, and other eligibility criteria. You can also check the SBI car loan offer on their website. While comparing choices, make sure to look at the car loans offered by the car vendor finance company.
Loan to Value (LTV) proportion
This is the amount of your car's price that will be financed by the bank. The rest is called margin or down payment money, which must be paid from your own funds. As moneylenders don't loan up to 100% of the car's total price, make sure to analyze the LTV proportion offered by different banks. In any case, consistently attempt to pay higher down
The payment will help to lower interest costs. A higher down payment can likewise help you in benefiting from lower interest rates and other better loan terms. At the same time, don't deplete emergency funds or reclaim long term investments as that can adversely affect your future monetary condition.
Evaluate your EMI affordability
Check your EMI affordability by deducting all monthly expenses, for example, family expenses, existing EMIs, insurance payments, and SIP commitments for essential monetary objectives from your net monthly pay. Always remember that most moneylenders lean toward your absolute EMIs, including the new car loan EMI, to be inside 40% of your net month to month pay. When you know about your EMI affordability, prefer a more limited tenure as that will diminish your interest rate.
Try not to disregard the processing charges
The handling expense of your car loan can go up to Rs 10,000. While numerous money lenders reduce or completely waive off their preparing expenses during holiday or festive seasons, ensure that you are not being charged a higher interest rate or any extra charges to make for the concession or waiver of the handling expense.
Check foreclosure or pre-payment charges
Making prepayment of your car loan can help in diminishing your interest rate. However, a number of banks demand prepayment fees on car loans granted at fixed- interest rate, which can go up to 6% of your exceptional loan head. A few moneylenders likewise cap the number and amount of prepayments permitted inside a year or during the whole tenure. Subsequently, while choosing your moneylender, pick the one that forces the least limitations and charges the less on making prepayments.
Conclusion
After you make sure about these six points mentioned above and you have prepared yourself accordingly you will most probably be in a comfortable situation to take a car loan.
