A car is not only an aspiration but also a necessity in many cases. Getting a Car Loan can help you achieve this goal. You can easily buy a new car or a used vehicle, with the right amount of financial support by way of car loan financing. Read on to know what you must do and what you must not do when applying for a Car Loan.
Do's before applying for a Car Loan
1. Check your credit score: Your credit score plays a pivotal role in determining your Car Loan interest rate. A higher score can help you secure favourable terms and lower rates. If your score needs improvement, take steps to boost it before applying.
2. Estimate your budget: Assess your financial situation and determine how much you can afford to spend on a car. Consider insurance, maintenance and fuel costs besides just the loan amount. Use online calculators to understand your monthly obligations.
3. Consider the loan term: While longer loan terms lower your EMIs, they often come with higher interest rates and increase the overall cost. Choose the shortest term you can afford to minimise interest expenses.
4. Factor in a down payment: A larger down payment reduces the loan amount, which can lower your monthly payments and the total interest paid over the life of the loan.
5. Check vehicle history: For used cars, always check the vehicle history report to avoid cars with hidden issues.
6. Negotiate terms: Don’t be afraid to negotiate the loan terms with the lender, including the interest rate and repayment period.
Don'ts prior to applying for a Car Loan
1. Overlook total loan cost: Focussing solely on the Car Loan EMI can be misleading. Lower monthly payments often mean a longer loan term and higher overall interest. Always consider the total cost of the loan.
2. Neglect research on Used Car Loans: If you’re opting for a used car, be aware that interest rates can differ from New Car Loans. Used Car Loans might have higher rates due to the increased risk for lenders.
3. Open new credit accounts before applying: Applying for a new Credit Card before taking a Car Loan can negatively impact your credit score and debt-to-income ratio. This makes it harder to qualify for favourable terms.
4. Ignore loan eligibility criteria: Different lenders have varying eligibility requirements. Make sure you meet the loan eligibility criteria before applying to avoid unnecessary credit inquiries, which can harm your credit score.
Also Read: Top 10 financial advice on buying a car
Conclusion
By adhering to the do's and don'ts for Car Loans, you can navigate the process with confidence and secure the best possible financing for your new or second-hand vehicle. Being proactive and informed will help you make sound financial decisions and enjoy your new car without unnecessary stress.
For New Car Loans, Axis Bank offers amounts starting from ₹1 lakh, up to 100% on-road funding, and a maximum tenure of up to 7 years. For Used Car Loans, amounts start from ₹1 lakh, with up to 85-95% of the valuation amount for sale-purchase and a tenure of up to 5 years. Apply for a Car Loan with Axis Bank with confidence!
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd.
and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader
for taking any financial decisions based on the contents and information. Please consult your financial advisor
before making any financial decision.
