Over the years, an increase in the income of people has led to a lift in living standards. For most people, owning a car is not a luxury anymore due to various options like car loans and discounts provided by banks and other financial institutions. Buying a car has now become a primary goal for the young population, which is then followed by planning financials for purchasing a home. It comforts your routine commute and has many advantages, like taking a random trip or going out without a second thought. When you buy a car, it is always advisable to apply for a car loan, regardless of the model you plan to buy.
Although getting a car loan is not strenuous, you must have prior knowledge of a few parameters to make the process quick.
Here a few points you should know before applying for a car loan that can also tell about your eligibility and the maximum amount you can get as a loan:
1. CIBIL Score
The first thing you can do before applying for a car loan is to check your CIBIL score. It is a credit score or a 3-digit numerical term that gives an analysis of a person’s credit files. You need to maintain your CIBIL as whenever you apply for any loan, your credit information is sent to the bank or financial institution to determine your eligibility. A high CIBIL score can lead you to get a lower rate of interest on the car loan for which you are applying or have applied. If it is low, the interest rates will be significantly higher. A low CIBIL score also leads to rejection of loans sometimes.
2. Rate of Interest
Different banks have varied rates of interest for which you can get a quote to compare and choose the one that suits your budget. After you have checked the CIBIL score, the next step is to check for a lower rate of interest. You should always start it with the bank holding your account as you already have a banking relationship with them. If you are not able to find desired interest rates, you can try it with various other banks or financial institutions.
3. EMI Payments
It is essential to assess your loan repayment capacity for the car loan with its tenure. An affordable EMI is the one that fits your monthly budget for its entire tenure. You can also check it online as there are multiple EMI calculators available. Also, while choosing the best monthly option available, you must look into the car loan repayment period. Ideally, you should not consider long repayment tenure as you may end up paying a higher rate of interest and overall cost of the car.
4. Car Insurance
It is an essential aspect of maintaining your vehicle on the road. So, when you think of buying a car, you should also check for car insurance online to get an idea of the best deals available. Since it is mandatory by the government, you should only buy car insurance from reputable insurance companies or banks to avail of the best deals and discounts.
5. Service Tax
Service tax is a basic charge which banks take from you on behalf of their services. All banks have their terms for defining service tax. Therefore, you must read them or enquire about it properly before applying for a car loan. It is a non-negotiable tax which is paid either annually or as a one-time charge, depending upon the bank’s terms and conditions. You can always ask your bank before signing any paper to know about the frequency of service tax for a particular car loan.
6. Offers and Schemes
Indian banks offer various discounts to their customers, especially during the festive season. So, if you are planning to buy a car, do not forget to ask for offers when you apply for a car loan. These offers can save you a considerable amount and may offer some fee waiver options.
These are some of the main things you can check before applying for a car loan. Once you have analyzed all the points, choose a reputable bank like Axis bank that offers facilities for a quick and hassle-free process.
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