WHAT IS A AUTOLOAN?
Your auto loan interest rate is determined by your credit score, loan term and amount, along with the value of the car itself.
While many buyers shop for a car loan at the same time they’re shopping for a car, a better way is to compare annual percentage rates (APRs) across multiple lenders to make sure you’re getting a competitive rate. If the dealer can beat it, you’ll know you’re getting a fair offer.
Tips about car loan
Shop around for the best interest rate
This is offered by various banks or financial institutions before actually getting a car loan. Since there are no standard rates in the market, even a slight difference of a few points in the rate of interest could play a huge impact on the amount that you have to repay the lender. The rate of interest differs from floating to flat and varies from lender to lender. Obtain quotations from different dealers of the desired vehicle. Every car dealer has a tie-up with different lender and hence you might receive various quotes on interest rates and other charges. This can help you in evaluating the deals available while helping you the best deal for your car.
Accurate and complete documentation
Every lending institution follows the KYC (Know Your Customer) norms for granting loans. There is a certain set of documentation that needs to be completed and verified along with your credit record to fulfil the approval of a car loan. Prior to shopping for a car, it can help to get a pre-approved car loan car financing officer from the lender of choice. This guarantees faster processing of the car loan but most importantly, a pre-approved car loan also works as an additional leverage while negotiating with the car dealer. You will be in a better position to bargain for more add-ons or fewer fees while closing the deal.
Choosing loan repayment tenure wisely
The most important part of a car loan is the loan repayment terms. Some lending executives may influence you to opt for a particular loan that may appear appealing to you. For instance, you might be quoted a smaller EMI amount for a seven-year loan period. But if you calculate the total repayment in seven years you may be in for a rude shock. Hence it is prudent to select the minimum loan repayment tenure that can help you to save a lot of money in the long run
Calculate your loan EMI, processing fees, and service tax and foreclosure penalties.
Fortunately, these days a number of financial websites offer easy EMI calculators that can help you to plan your monthly EMI based on the interest rate, thus helping to decide the best interested rate and loan for your car. Also, look out for processing fees as various lenders charge different fees and hence a comparison of various lending options can help you make an informed decision. Similarly, you may also have to look into service tax, on whether it needs to be paid as a one-time lump sum fee or to be paid on a yearly basis. Another important factor to look into is foreclosure penalties. Most buyers are unaware of the foreclosure clause and since various lending institutions have different foreclosure rates it is important to choose your lending institution wisely.
Scrutinize for schemes and offers
Almost every bank or lender that offers car loans provides a number of attractive offers and deals. Armed with a sound credit profile, you could even bag a customized deal and in some cases you could also obtain a 0% finance scheme on your car loan amount.
Benefits of Personal Loan
Established Lenders
Banks are among the most established lending parties around. They are not likely to pull some of the tricks that ‘cheap money shops’ and other third parties sometimes engage in. Customers can often profit from selecting lenders with integrity, a good reputation, and a large cash flow.
Additional Services
In addition to a bank car loan, banks can also help with mortgages and other forms of loans. Some banks can apply a home equity loan or home equity line of credit (HELOC) to an auto loan. Making your bank a one-stop shop can be a way to streamline different types of borrowing including car finance.
Pre-approval
Some banks will also allow you to get pre-approved for a car loan. In order to come onto the dealer’s lot with confidence and know what kind of car you can afford before talking to a representative. For some buyers who might not completely trust their local dealership, or those who just want a clearer picture of their eligibility for financing, this option can be helpful.
Emergencies
Some banks will also allow you to get pre-approved for a car loan. In order to come onto the dealer’s lot with confidence and know what kind of car you can afford before talking to a representative. For some buyers who might not completely trust their local dealership, or those who just want a clearer picture of their eligibility for financing, this option can be helpful
Some banks say they are "not in the business" of doing auto loans or other personal loans. They will grudgingly offer you an auto loan that may be accompanied by generally higher or uncompetitive interest rates. These are not really the best lenders for financing a vehicle. If they’re not interested in making a deal for your money, find someone else who is.
Skipping Preferred Customer Status
If a particular bank does not know you or have a financial history with you, you won't get some of the preferred status that you might enjoy from another lender. Say, the dealer you bought your last car from, or a local credit union connected to your employer.including car finance.
