Are you going to buy a new car? It is easy to take a new car on loan if your income and credit score meets the eligibility criteria. You should buy a car loan smartly because it makes a huge difference in your borrowing experience or helps you to save money
There are some things you need to consider taking a car loan online. Read below to know about such things you should keep in your mind to avail of a car loan.
1. Rate of interest
The car loan interest varies from 6.75% to 9% pa.The factors that affect car loan interest consist the income, credit score, loan tenure, car model, down payments, etc.
If you want to get a loan at a low-interest rate, then you should compare the loan offers and choose the best lender that provides you with good deals on a car loan. Lenders offer you car loans with both fixed and float interest rate options. You can easily use the car loan EMI calculator to calculate the interest rate and EMI.
2. Check your credit history
A higher credit score helps you to get a car loan at an attractive interest rate. Before applying for a car loan, you should check your credit score itself. If your credit score is not above the range, then you should take some actions to improve your credit score. Lowering the credit use ratio or repaying the loans helps you to improve it to a certain extent and apply for a car loan.
3. Decide on the right tenure.
A longer loan tenure helps you to pay your lower EMIs, but you should pay more interest on the entire loan amount. If you can pay higher EMIs, you must opt for a short tenure. Usually, the lenders permit you to repay the loan for up to 7 years. Longer tenure fits borrowers who face difficulties in repaying the high EMI.
4. Charges associated with loans
Some lenders charge lower interest on a car loan, but at this time, they charge higher fees and charges associated with the loan amount. So, it may lead the case to pay more charges than you save for a car loan for a low-interest rate. It is suggested to choose the lenders who apply the minimum charges with low-interest rates.
5. Repayment flexibility
Do you want to repay your car loan earlier than the loan tenure? If yes, then stay aware. Your lender may possess the prepayment charges if you pre-close or prepay your car loan. While choosing the lender for your car loan, you should check in advance whether they impose a pre-closure or pre-payment penalty. It is suggested to choose a lender who charges less penalty on car loan repayment.
Conclusion
A car loan is a loan that you can take to buy your new car. It has come at a low-interest rate. It means you need to pay less EMI every month to repay the car loan amount.
