Things To Keep In Mind Before Signing Up For A New Car Loan

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For most of us, a motor car purchase takes the second spot on the ‘life goals’ list after a house. It could also be a primary need for many. But since the cost of living these days has shot up into the stratosphere and our incomes try really hard to keep up, borrowing is a great option to achieve these goals in the present. With so many financial institutions doing business in the country, Car loans are easily available these days, or even pre-approved for some, as long as you meet a few basic requirements.

However, before you sign that agreement for a New Car Loan, there are a few important things you must keep in mind. Because a good deal has never caused any harm and everyone is happy at the end of the day, if a few bucks bounce back into your pockets. So here are a few tips which should help you before you sign on the dotted line.

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Shortlisting The Right Car

Prioritize your needs. Do not be tempted to buy an expensive car which is beyond your reach, only because the bank throws a decade long repayment tenure towards you. Instead, shortlist a car from the price segment, where you can pay a maximum amount against the car’s total price as down payment and repay the rest in the shortest possible tenure while being comfortable with your other expenses. Remember the basic rule – The longer the tenure, the more interest you pay. While picking the right car, it is also important to consider running costs, which will be over and above the monthly payments you would make towards the Car Loan.

Hunt For The Lowest Price Possible

It’s simple. The lesser you borrow, the lesser you’d have to repay as capital and interest. Car dealers always carry a profit margin on all the cars they sell and it is a good idea to get a quote from multiple dealerships. Once you find a good deal, do not shy away from negotiating further to get an even lower final price. Do not fall into the trap of freebies and gift vouchers. There is no better deal than the one where you pay less.

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Find The Best Deal For A New Car Loan

Once you’ve shortlisted the car, it is then time to find the best financing deal. Do not just take what your personal banker or the car dealer himself offers and ask around at multiple institutions for the lowest interest rate possible. If a deal sounds too good to be true, verify that it isn’t a honey trap full of hidden charges.

Documentation

Ensure your credit report is in the green and all the basic documents you require for the loan to be processed smoothly are in order. While signing on the loan agreement, read the fine print carefully and try to find a deal where you can prepay the entire loan if you wish before the tenure ends, without any penalties. Ensure you get a good deal and negotiate with the bank for the lowest possible processing fee.

Note: Images used in the post are for representation purpose only

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