Getting a car loan is not as difficult as it used to be earlier. Many banks and financial institutions in India are offering car loans, making it easier to own a car. These loans come at competitive interest rates and with flexible loan tenures. As a car buyer, you will be tempted to pick a car loan to get your hands on the dream vehicle without burning a hole in the pocket. In many ways, it makes sense to choose a car loan instead of paying a downpayment for the same. But, there are a few things that you as a car loan applicant must be aware of. Let’s look at five car loan mistakes to avoid.
- Not paying attention to credit score
It is necessary that you know your credit score before you apply for a car loan online. If you have a high credit score, it will reflect financial stability and you might be able to negotiate with the loan provider on the interest part and get a better deal.
- Borrowing more
A negative about getting a car loan is that you don’t think about the current financial situation, affordability and tend to apply for a higher car loan to buy a better car. Do not go overboard and make sure that you borrow only what you can repay comfortably. Buying your dream car might get easier with a car loan, but it can be financial stress over a period of time. Don’t let that happen to you.
- Not checking out more lenders
The interest rate is an important factor when applying for a loan. Therefore, it makes sense to talk to at least 4-5 lenders before finalising the car loan. Every lender might give you a different interest rate quotation, select the one that offers the best rate. Also, pay attention to other aspects such as loan tenure, repayment options, eligibility criteria, documentation etc.
- Ignoring the fine print
Never sign loan papers in a hurry. It is important that you check all the terms and conditions of the offer. Do check if the interest rate on paper is the same as what was committed by the lender. Also, read about prepayment fee, foreclosure fee, other charges and fee, before you sign on the dotted line. This step will save you from confusion in future.
- Do not choose many add-on services
Car dealerships will offer add-on options such as extended warranty, alloy wheels etc, asking you to get the car customised as per your choice. However, all these features come at an extra price, increasing your overall purchase price. If you add these expenses to the auto loan, it will increase the borrowing amount. It is a wise decision not to choose many add-on services.
Making any of the above-mentioned mistakes could add to your expenses. Make sure you do not commit these five mistakes when applying for an used car loan online or a new car loan online.