A few years ago, applying for a car loan required you to visit the branch office of a lender personally. The process involved a lot of documentation and was time-consuming. However, thanks to the internet, the car loan process is now easy and quick.
Nevertheless, there are a few essential things that you should take into consideration before applying. Five such important things are-
1. Interest Charged on the Loan
The most important factor is the car loan interest rate. There are now banks that offer car loans at attractive interest rates. If you are looking for a sweeter deal, consider applying for car loan from a lender with whom you already have an existing relationship.
You might get a good offer based on your relationship with the bank. However, don’t take it for granted that you will get the best deal just because you hold an account there. Shop around for the best deal.
2. Loan Amount and Tenure
Banks now offer up to 100% of the on-road price of the car as the loan amount. Depending on your requirement, you can select the right loan amount. Needless to say, the higher loan amount would mean higher EMIs and higher overall interest outflow.
If you are getting a car on finance, a lender would generally have a repayment tenure of up to 7 years. Just like the loan amount, select the loan tenure carefully as it’ll directly affect the EMI amount.
3. Your CIBIL Score
Loan providers in India have their car loan eligibility requirements which you are required to fulfil to get the loan approved. Apart from your income, occupation, and age, one of the most critical requirement is a good CIBIL score.
The CIBIL score is a 3-digit numeric summary of your credit history. Lenders generally require the borrowers to have a CIBIL score of at least 700. Check your CIBIL score before applying to make sure that you are eligible for the loan.
4. Processing Fee
The next important factor is the processing fee. Lenders charge a fee for evaluating your loan application. This can either be a fixed fee or a percentage of the loan amount. Many lenders who offer cheaper car loans often have a higher processing fee.
So, before starting the car loan approval process, ensure that your loan provider has a reasonable processing fee which is in line with other top lenders.
5. Documents Needed
Irrespective of whether you apply for the loan offline or online, you’ll be required to submit a few documents. You’ll mostly need your ID proof, address proof, bank statements, and income proof.
It is better to have these documents ready before you apply for the loan to make sure that the application process is smooth and your loan is processed as soon as possible.
Buy Your Dream Car Today
These are some of the most important things to keep in mind while taking a car loan. While applying for a car loan is easy, knowing about these factors will help you pick the right lender and ensure that your application process is hassle-free.
In case of any queries, do not mind getting in touch with the lender and get the questions answered. A car loan is a long-term commitment, and the better the transparency is, the better it’ll be for you as well as the lender.