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Gone are the days when you had to shell out your savings to purchase your dream vehicle. Now, you can easily get your own car through a hassle-free car loan online either through any bank, NBFC, or Fintech organization. However, before applying for car loans, there are a few important things that you must consider.
Your Credit Score
The credit score is one of the most important criteria which is scrutinized by the lender before approving your loan application. Based on your score, the bank will decide your eligibility as well as the interest rate of the loan. The minimum credit score preferred by banks is 750 and above. Any score above 750 is more likely to increase your chances of loan approval at low interest rate.
Compare the rate of interest across all lenders
The next important thing to check and compare is the rate of interest offered by various lenders. This will enable you to get the loan at the most affordable rate of interest which will help you in saving your money.
Assess your EMI affordability
While opting for a car loan, it is important to evaluate your repayment capability to know whether you will be able to pay your loan on time or not. To know this, you can make use of a financial tool online known as Car Loan EMI Calculators.
Tenure of the Loan
Another major aspect of a car loan is the loan tenure or the repayment period. One should always choose the loan tenure wisely. The longer the tenure the higher will be the rate of interest, the shorter the tenure, the lower will be the interest rate. So, choosing a shorter tenure would be great for your car loan.
While opting for car loans, lenders will try to convince you to take credit insurance as well along with your loan. Although credit insurance is a very helpful tool to cover your loan payments, it is not a good idea to buy it from the car loan lender. This is because they will get the insurances only from the banks and agencies with whom they are affiliated with. So, in this case, you will not be able to get the best deal on the insurance premium. Hence, if you are interested in buying a car insurance along with your loan. Make sure you first do a thorough market research, compare, and evaluate various policies, and then select the best deal for yourself.
Check out the various loan charges
When you apply for a car loan, there are a few charges levied by the lender to process your loan application such as processing fee, prepayment penalty or foreclosure charges when you pay your loan before loan maturity. Hence, before finalizing your loan, you need to check all the charges associated with your loan to avoid any confusion later. For this, you can read the fine print of your loan agreement that mentions the details of all the fee involved.
Irrespective of whether you apply for the loan online or offline, you will be required to submit a few documents. Some of the basic documents that you will need while filing your car loan application are your ID proof, address proof, bank statements, and income proof. It is better to have these documents ready before applying for the loan to make sure that the application process is smooth, and your loan gets approved as soon as possible.