Thinking ahead in life is a start towards securing your future. It will enable you to cross many hurdles that come your way. Buying a car is one such decision. If you purchase a vehicle with a car loan, you work towards the goal of fulfillment for the years to come. The decision to take a car loan is an important one, as it requires thorough research and financial management.
There are many banks with various offers and choices of car loans, but you must select the one which is suitable for you. While taking the loan, you may find the price of desired vehicle to be higher and out of budget. You must also consider various factors that impact the car loan EMI.
Keep in mind the following aspects before you take car loans:
Maintenance Of A Good Credit Score
A significant aspect which determines the approval of car loan is your credit history. Higher the credit score, the higher are the chances of getting the loan. On the other hand, a lower credit score indicates an individual’s inability to repay the loan. Individuals with poor credit score may or may not get the loan. If they do, they will get it for a higher interest rate.
Therefore, banks prefer those people whose credit history proves their credibility. An added advantage would be that you could even negotiate with the bank to provide you with a lower interest rate.
Steady Income Level
Before approving a car loan, the bank always checks the steadiness of your income. The stability of your earning ensures them of getting the loan repaid. A secure occupation will reflect on your capability of monthly EMI (Equated Monthly Installments) repayment. You will benefit from this, and the chances of lower interest rates also increase.
Value Of Down-Payment
It will serve in your interest to use some of your savings as a down-payment for your car. The rest can be paid with the car loan. The higher the down payment, the lesser amount the bank will require to lend you. Hence, it will enable a lower-risk for the bank. You may also secure a lower interest rate on the car loan as you will need to borrow less from the bank.
With the use of an EMI calculator, you can evaluate the car loan amount online. You can get instant results, which will help you determine your needs better. In case your debt-to-income ratio is low, you will have the upper hand. It will show that you are capable enough to pay the regular EMIs every month without fail.
You will be in an advantageous position if you choose a car loan for a long tenure. Though you will be paying the interest for a longer time, a shorter tenure means a higher EMI. Therefore, you must calculate the interest payment for the tenure and select a car loan according to your suitability.
Age And Model Of The Car
During the process of a car loan, your vehicle will be taken into account as security. If you fail to repay the EMIs, the bank can seize your car. Therefore, before they determine the interest rate, the banks consider the model and age of the car. If you purchase a modern vehicle from a reliable manufacturer, it will have a higher resale value. The older vehicles or used vehicles have a higher interest rate as their value depreciates with time at a higher rate.
Ensure a Lower Interest Rate on Your Car Loan
The purchase of a vehicle via a car loan is a big responsibility. You must be fully informed before you make any decision. There are reputable banks like Axis Bank that offer you comprehensible car loans and assist you in ensuring a secure financial position. They enable a quick and hassle-free process for your comfort. Make sure you fully understand the prospect of availing a car loan thoroughly before applying for it.