Are you planning to buy a new car by taking a car loan? If yes, then there are a few things to keep in mind. It is essential to choose your car loan wisely, as this decision can significantly impact your borrowing experience and lead to substantial savings.
Here are 10 key factors to consider while applying for a car loan:
Interest Rate
The interest rates for car loans currently range from 8.65% to 15% per annum. Several factors influence the interest rate on a car loan, including your credit score, income, loan duration, vehicle category/model, and down payment. To secure the most favorable interest rate, it is advisable to compare various car loan offers online and reach out to leading lenders who provide competitive rates. Lenders offer both fixed and floating interest rate options. If market trends indicate a rise in interest rates, opting for a fixed-rate loan may be prudent.
Also Read What factors affect your credit score the most? Ways to improve it How being a loan guarantor can affect your finances and credit Taking a joint home loan? Consider these things first Loan against MF units cheaper than personal loan: your queries answered Loan Tenure
While a longer loan tenure may result in lower monthly payments, it also leads to a higher total interest cost over the life of the loan. If you are comfortable with higher monthly payments, a shorter tenure may be more suitable. Typically, lenders offer repayment periods of up to seven years for car loans. A longer tenure may be advantageous for borrowers who struggle with higher monthly payments or those who need lower payments to meet the bank’s loan eligibility criteria.
Also Read: Senior citizens gain big in Budget 2025 – Here’s how
Review Your Credit Score
A strong credit score can enable you to obtain a car loan at a more favorable interest rate. Therefore, it is crucial to independently verify your credit score before applying for a loan. If your score is lacking, consider taking steps to enhance it. Paying off existing loans and reducing your credit utilization ratio can contribute to improving your credit score. Once your score reaches an acceptable level, you may proceed with your loan application.
Charges Associated with the Loan
While some lenders may offer lower interest rates on car loans,
» Read More
