What Are The 5 Factors To Consider When Applying For A Car Loan?

By Author: Neha Sharma
Total Articles: 170
Comment this article

A car loan is a type of personal financial aid from a banking institute where one can purchase an automobile which can be brand new or second hand. This type of secured financial aid is bought as collateral, where the applicant can repay the amount in monthly installment rather than pay the whole amount in full. In this article, we give you information on the factors that need to be considered when applying for a car loan.

1. Credit History And Eligibility Of Applicant
The credit score and eligibility of the applicant is taken into account before the financial aid is sanctioned by the bank. If the application fits the correct eligibility, than the credit history is checked for any disparages. Certain factors like DTI ration i.e. debt to income, annual income, co – applicants loan etc. are taken into account to calculate if the application will or will not be rejected. A good CIBIL score of 750 allows an automatic guarantee of acceptance of the car loan.

2. Rate of Interest
The rate of interest offered by banks ...
... is different. This is an important criterion to consider before you begin your application for the car loan. These interest impacts they can make a difference in the final costing and also the tenure of the repayment. Ensure that you can bring the interest rate as low as possible which suits you financially as opposed to the offered prepackaged financial deals.

3. Down Payment of the Loan
Normally, banks will ask for a down payment which is between 15 to 20 % of the full amount that has to be paid by the borrower. These criteria can work in favor of the applicant if he puts in a high down payment then his EMI and interest rates will be low too.

4. Other Fees
Some banks charge additional fees for such financial requests. This includes fees like processing fees and pre tenure payment penalties. Some banks have different rates which include a flat rate for all the financial advance requests or a fixed percentage that is calculated on the overall amount. Always check the rates of the banks and compare the ones that suit your needs.

5. Package Deals:
Most car dealers, both new and old motor vehicles have tie ups with certain banks that offer certain package deals. These pre-approved vehicle deals make it easier for applicants to accept the vehicle and its loan without much inquiry into the contracts, at the assurance of the bank or the financial institute. This includes insurance and other side benefits for a discounted cost but may have hidden conditions. Check all the details of such package deals to ensure that you are not taken for a ride.

Author Bio :- Neha Sharma is a finance student who has gathered and researched about car loans. She is delighted to offer all relative information regarding this top to those who are interested in purchasing a car.