Like a lot of things which run our life, car has also become an integral part of our lives. Be it driving with friends for a long drive or going to a temple with your family, this thought always strikes your mind that we should have our own car. Purchasing a car was equivalent to purchasing a house in our old days. It had a symbol of social status to own a car in the society. Today, we have a lot of options when it comes to car models and the finance options to avail them. We live in the time where buying a car is merely a procedure of minutes and you can drive a brand new car back home.
Various banks and non-banking financial companies offer various schemes and offers on car loan interest rate that the buyer cannot resist buying a car. It has become fairly simple to achieve your car dream. Still there are people, who have some common myths when it comes to purchasing a car with the help of car loans and we are here to clear those myths for you.
Today we will sight some common myths about car loans,
A Perfect Credit Score is needed to get approved:
This is the most common car myth amongst people. Many have perception that, if you do not have a perfect credit score, you may not have your car loan sanctioned which is 750 and above. What many of us don’t know is that car loans are considered to be one type of secured loan where your car is taken to be collateral i.e. if you fail to make the payments on time the bank has all the right to confiscate your vehicle. A good credit score will only help you get a loan with favorable interest rates. A bad credit score on the other hand will not hurt your chances for a car loan but you will have to pay more interest rate compared to market standards.
Car loans are only for brand new cars:
This is another most common myth stating you only get car loans when you purchase brand new cars. Many people prefer buying used cars over new cars, but are afraid if there are any loan options available to make the purchase. There are many banks and non-banking financial companies who provide loan on used cars and help you make the purchase. You will just have to be make sure select a model which is not more than six years old.
Only one person can apply for a loan:
You can now apply for a car loan with your spouse or a family member. By adding a co-applicant to the loan, you can avail best options available in the car market. Just make sure the co-applicant also has a good credit score to make the process easy. This co-applicant procedure can be used when you are trying to buy a luxury car and your file is not adequate for loan approvals.
Make a large down payment
This is absolutely wrong, if you would like to dodge the huge EMI burden, only then make a large down payment for your car. These days there are banks which give up to 95% funding on the total value of the car. This myth is the oldest in the books of car purchasing. On the other hand, if you have some money to spare you can make a good down payment; you can close the loan faster which will help you save a lot of money.
100% financing on your car
Do not fall for this. The bank can maximum offer you 95% funding on the car value depending on your previous payment records and your credit score. Sometimes you may have to shell out 25% down payment if you lie in the bad credit score category.
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