Purchasing the ideal car is a dream we all have. However, in the midst of fulfilling that goal, you may end up opting for a less-than-ideal car loan deal. So, if you are applying for a car loan, steer clear of these common mistakes.
Not Taking Credit Score into Account
Your credit (CIBIL) score indicates your financial stability. It informs the lender how likely you are to repay the loan in a timely manner. A higher credit score translates to higher loan eligibility, low interest rates, and other advantages. If you have a high credit score, you are in the position to negotiate interest rates. By doing your homework, you can secure yourself a good loan deal.
Borrowing More Than You Can Afford
While loans are a great way to finance your purchase, it is important to take your budget into consideration. Taking logical steps beforehand will ensure timely repayments in a hassle-free manner. A good way to not letting your feelings get the better of you is to get pre-approved for a loan. This way, you will know what your budget is, and the EMI structure you can afford.
Not Comparing Options
If you are spending weeks, possibly months, looking for your favourite car, why not do the same when you apply for a car loan? Different banks offer different interest rates, terms, and conditions. You can save a chunk of money in the long run by comparing different lenders. While making a decision, take various aspects of the loan into account, such as loan eligibility, documentation required, repayment options and tenure of the loan. Making a check list and comparing different options will help you arrive at a robust and affordable loan plan.
Not Reading Over the Fine Print
We tend to ignore the list of terms and conditions in a document. Look for hidden charges and conditions such as late payment fees, prepayment fees, foreclosure fees, etc. It is possible that you decide to pay off the loan early and get charged for it due to an early foreclosure fees clause in your contract. Know exactly what you’re signing up for.
Choosing the Wrong EMI Schedule
A small Equated Monthly Instalment (EMI) might seem lucrative, but unless the loan lender is offering a no cost EMI, you might be paying more for in the long term. The best way would be to opt for the highest EMI you can afford. The same goes for long-term repayment. While it might seem like you are paying negligible amounts to own your car, but you might pe paying more in terms of interest. It is important to look at the big picture beforehand. Calculate how much payment you can make monthly and choose a shorter-term plan with the closest EMI amount.
Do your homework before you apply for a car loan. Get familiar with industry terms and always read the offer document carefully before signing it.
If you are looking for a vehicle loan, check out the options provided by IndusInd Bank. The attractive vehicle loans make it easy to finance and own your dream car in a hassle-free way. For the convenience of the customers, the loans are processed within a short span of time and are available at attractive interest rates.