In today’s scenario, where the public transport system is crumbling, owing a car provides you with the much-required comfort in your daily commute. Buying a car is a big deal as it is a major landmark in one’s personal and professional life.
But not many have the adequate funds to purchase a car. This is where a car loan bridges the gap as it allows the individuals to own a car just by paying affordable EMI every month. You can get online car loans just with a click of a button. Nowadays, many lenders provide loans in India for both new and used cars, but you need to choose a lender that offers the car loan at lowest interest rate.
But, before applying for a car loan in India, consider these below factors to grab a good deal:
1. Car loan eligibility
Before applying for a new or used car loan, you must fulfill some criteria of the NBFC (Non-Banking Financial Institutions) entities before sanctioning you a loan. The eligibility depends on number of factors like –
• The individuals must be between 21 years at the time of loan approval to 60 years at the end of the loan tenure. Apart from that salaried professionals must be employed for minimum of 2 years and must be working for at least 1 year with the current employer.
• The individual should also have a good credit score. A credit score of 750 and above is considered a good score
2. Your Credit Score
Credit score has become an important part of loan eligibility that forms basis for sanctioning loans. The credit score of a person is defined as the loan repayment ability of an individual. Your credit score goes down if you missed to pay an EMI earlier or did not pay the loan amount before the due date. The credit score can be improved if you repay your loans on time. A credit score of above 750 helps you to get faster loan approval with low rate of interest that will save you lots of money.
3. Affordable EMI
Before taking a loan, consider the amount of EMI you can afford to pay every month. There are many credit has a car loan EMI calculator that lets you calculate the EMI based on your down payment, the rate of interest, loan tenure etc.
The more your loan amount is the higher the EMI would be, so try to pay as much down payment as possible. Also, shorter the car loan tenure is, higher the EMI you would have to pay. So, before taking the plunge, make sure EMI fits your monthly budget.
4. Prepayment charges
Car loans in India are loans given at a fixed rate. You might want to close off your loan when you have enough money to repay the entire loan. And if you try to pre-pay a loan then there might be a prepayment penalty that banks will charge from you. So, always check with your bank the pre-payment charges on the loan. Usually, there are no prepayment charges if you decide to prepay the remaining loan amount within a year. If you decide to prepay the remaining car loan amount after a year has passed, then you might be charged 2- 5% of the principal outstanding amount. So, always know the pre-payment charges before taking a loan.
However, these factors are the basic and may differ from one lender to another. So, do not proceed with the loan application blindly after reading this article. You need to review and compare all the financial institution in the market and then take a smart move by choosing the best option.