Looking to buy a new or used car in India? Well, you must be excited then. However, have you thought of the car loan? Most of us try to get the best deal on a new car, the lowest price possible. But, we only think of getting a loan on the amount we do not have. We rarely think of getting the best loan deal too. Here are a few important tips to guide you through the auto loan purchase process.
You need to calculate well in advance the amount of money you need to borrow as a car loan. However, do not calculate this amount based on the ex-showroom price of your new car. Collect as many quotes as possible from multiple to get an idea of how much you would need as loan. If you calculate the auto loan amount based on the ex-showroom, you may end up having nothing extra in your wallet to pay off the taxes and car insurance.
However, to know how much you would need as car loan, you would have to first calculate the amount you already have ready for your new or used car. Remember, the more you borrow as loan, the more cash you would have to re-pay with interest. So, try to keep the loan amount low. Also, loan lenders in India give you a loan only when they are sure you are able to re-pay. With the monthly EMI’s will you be able to afford the loan?
Are you trading in your used car? If yes, then subtract the amount you would get while trading it in when calculating the amount to be borrowed as loan. Keep the auto loan value as low as possible. You will then have a lesser amount to repay, plus a lower interest too. Also, the interest rate depends on the amount of loan borrowed. So think wise.
If you’re trading in your car, don’t go by the dealer’s words blindly without making any research yourself. Search on the Internet the approximate value of your used car based on the model, the year of manufacture, distance traveled so far, the mileage it delivers, etc.
Do you have any loans borrowed previously to repay? If yes, pay them off first. If there are too many loans already and it’s not possible to repay all of them at once, consolidate them. Having too many loans in your name does not give positive vibes to the lender. He needs to know that you have the potential to repay the car loan.
As for the interest, it’s advisable to calculate it online. As mentioned earlier, try getting multiple loan quotes so that you have an idea of the current interest rates. Compare the quotes you’ve collect, shortlist the ones offering the lowest interest rate and EMI, then negotiate with the lender to offer you an even lower interest rate, and go for the auto loan with the best rate.
Next, after finalizing the deal, do not forget the paperwork. Read all the documents carefully, lest you’ll end up in a trap at a later stage. Get every point in the loan documents clear before offering your signature. Get clarity on all the payment and interest details.