Before selecting a vehicle model and visiting the dealer, analyse and spend time on the figures and prepare some questions to consider four-wheeler loans.
It is best always to make informed decisions financially. Knowledge can take you far when you research for the best car loan deals. Factors to prioritise are lower interest rates and minimum processing fees.
A little research and some set of fundamental questions help save you more on your car loan. What are these questions? Let us find out:
What are the interest rates charged on a loan?
This should be at the top of your mind while applying for car loans. Check the interest rates banks are charging on your loan. Several banks provide these loans at lower rates. For instance, it starts for as little as 9.5% annually.
What is the total amount financed?
It is best to pay about 20% of your vehicle price as the down payment and the balance 80% by the bank based on the car's market value. However, a few of them offer up to 100% finance on the ex-showroom price. When you apply for car loan, follow the 20% rule of the monthly income under EMIs. Paying a higher EMI amount strains your finances.
What should be the down payment and the tenure for the loan?
Understand that your four-wheeler loan stays with you for a while, and you need to pay regular EMIs for years. The key here is intelligent financial planning. You should not agree to a higher EMI amount, which places immense pressure on your daily budget for keeping the tenure towards the lower side and saves interests. You should also avoid opting for the longest tenure as it increases the interests payable. A balanced EMI is sensible which does not put excessive pressure on your earnings.
What fees are part of the loan?
Besides the interest rates, you need to pay several fees for the car loan. Ask about the charges applicable both at the time of sanctioning the loan and while paying the debts. Some of the standard fees levied on the consumers are processing fees, documentation expenses, credit report costs, registration collection fees, stamp duty, part prepayment costs, foreclosure, delayed payment penalties, etc.
Can I make payments early without penalty?
You should ask this to the lenders before you apply for car loan. Most lenders levy prepayment, foreclosure, and other such fees when deciding to pay off the debts before the tenure ends. Always go for banks that charge minimal in such events. Some do not charge for foreclosure at least for two years. Such banks should be given preference.
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