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What Are Car Loans? 5 Tips For First-time Buyers

By Author: neha sharma
Total Articles: 1245

"Earlier, owning a car fell under the luxury category. Today, it has become more of a necessity. You need a car to avoid the crowd that throng on local transports. You require a vehicle to go on long weekend drive/trip with your family. And if you do not have enough expenses to meet the above requirements, you can always go for a car loan.

What are car loans?

It is a personal loan that allows the potential user to purchase a car of their choice by paying monthly instalments. However, if the borrower fails to make timely payments, the lender can take away the vehicle until the debt is paid off. For first-timers, it is always difficult to make a choice. Therefore, thorough research and planned budget plays a crucial role while purchasing a car.

Apart from the mentioned points, there are specific tips before applying for car finance:

1) Have a fixed budget: ‘Can I repay the amount?’,
‘Do I have enough credit score to make timely monthly instalments?’ If your answer is ‘yes’ for the above questions, then go for the car loan. Know your repayment capacity. Also, do not opt for a higher mortgage just because you are eligible for one.

2) Stick to a particular lender: Multiple applications can bring down your credit score. It will show you as a credit hungry borrower. This, in turn, increases the chances of your application getting rejected.

3) Compare loan options: You can acquire car loans online as well. That gives you the privilege to compare various schemes. You can check the interest rates offered by different banks and opt for the one that fits your bill.

4) Make a right down payment: This is the part that first-time car loan buyers have to be careful about. Pay an initial loan down payment that minuses a part of your overall loan amount. It will reduce your total interest payouts at a later stage as well.

5) Choose an appropriate tenure: Lastly, go for a mandate that is within your reach. Shorter tenure usually an ideal solution. Longer tenure leads to higher interest rates over the duration of the loan.

Are your eligible to opt for car finance?

The criterions might vary lender to lender. However, you will have to fulfil the following car loan eligibility rules:

1) You should be a resident of your current area for a year
2) You should fall within the age range of 18 to 75 years
3) You should receive a monthly income of INR 10,000
4) You can be a salaried or self-employed individual
5) You should be employed with/run your current organisation/business for at least 3 years

You can avail the best car loan from top banks such as HDFC, Axis Bank, SBI, ICICI Bank, Dena Bank and Andhra Bank. "

Author Bio:- Neha Sharma is an aspiring student in the field of finance. She spends her free time reviewing the latest apps introduced into the market. Check out her work as she talks about a car loan.

Total Views: 15Word Count: 502See All articles From Author

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