You may fall short of funds to buy the car of your choice. Vehicle finance may be the only option left to meet the fund requirements urgently. Most of the reputed car dealerships offer assistance in obtaining a loan from the bank of the customer’s choice. There are a few things to remember before availing a car loan. It is wise to keep a note of this, beforehand. So that there are no dilemmas whilst opting for car finance.
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Things that can Affect the Loan Eligibility
The banks might check your eligibility before approving the loan. Hence, you must be sure that you qualify for the loan without any issues. The factors that affect the car loan approval, as well as, the amount approved are:
CIBIL or Credit Score – CIBIL score or Credit Score of the individual would be ascertained by the bank or financer before approving the loan. An average credit score would make it difficult to get a loan. A poor grading would reduce the chances further. Even then, there are possibilities of approval since the car loan is a secured loan, as the vehicle will remain mortgaged with the bank until the completion of repayment.
You may check your credit score and credit history before opting for a car loan. The documentation may turn complex in case there are anomalies in the credit history or if you have an undesirable credit score.
Monthly Income – The loan amount approved would be directly proportional to the income of the individual. Banks or NBFCs may ask for monthly statements of the previous six months to confirm the income received. If the income is not up to the level of loan sought, the lender may agree to a lower amount.
You may think of other secured loans like a gold loan if this is the case. The gold loan has a lower rate of interest. And would be a preferable option to a personal loan.
Loan Pending Repayment – Are you a debtor already? Are you paying EMI on any other loan? Then the loan amount approved would depend on the same. You may wait for the other loan to close if only a few months are left. And consider a car loan after that.
The individual’s overall financial status also would be a determinant. Banks can assess everything in a single click. They would grant only the amount the individual is capable of repaying.
Things to Consider Before Opting for a Car Loan
You must consider the elements we discuss here before proceeding with a particular bank for a car loan. Go for the best car loan option, to avoid regretting later.
Interest Rate – The car loan interest rate will differ from bank to bank. You can ask for quotes from the banks of your choice and highlight the one that offers a better interest than others are. Shortlist those banks, which offer a low interest rate.
Hidden Charges – Some of the banks would not reveal certain types of charges. Those would not be reflected in the documents. You must ask the bank executives for a clear detail on the additional charges.
Pre-closure Fine/ Penalty – A number of banks seek an additional amount as a fine or penalty if you foreclose or pre-close the loan account by paying a lump sum amount. Confirm the penalty amount.
Service Charge – Every bank charges service charges from the borrowers. Get the adequate info in advance. You may note that the amount charged is non-negotiable.
Obtain Quotations – Obtain quotations from different banks and analyze each. Contact the branch (better avoid customer care) and get first-hand information if you have any doubts or confusion.
Offers or Schemes – Banks, in a bid to promote car loans, may announce deals, offers, and schemes for a specific period. It would be advantageous if you can grant a loan in the said period. Check out offers and special schemes while discussing car loan options from the banks.
How can Car Dealership Help You to Obtain a Car Loan?
Reputed dealers can help you with the loan approval process to buy second hand cars. They will be maintaining a rapport with the credible banks, which the customers choose normally. The executives would be aware of the process, the unique aspects, and other exclusivities of a particular bank most probably. They can arrange a discussion with the bank’s representative for you.
At the same time, don’t put all the responsibility on their shoulders. You must evaluate the options properly prior to finalizing one. Many customers opt gold loan instead of a car loan if they have gold available. Low-interest rates and flexible EMI options are the main positive factors of gold loans.
Do you have any questions regarding car loans?
We are more than happy to help. Just drop us a message and we would revert to you at the earliest.