Having your own car has a number of advantages. For starters, you don’t have to depend on public transportation which can be unpredictable at times. You can also enjoy family road trips or go on vacations whenever you like. However, a decent car is expensive which is why it’s not always possible to pay the full amount in a single payment. This is why many people take car loans.
If you are interested in taking a car loan yourself, then be sure to prevent the following mistakes to get the best deal possible:
1. Not Comparing Your Options
One of the biggest mistakes that people make when applying for car loans is not shopping around even though they can do that easily on the Internet. There are a number of websites that can help you compare all the auto loans available in the market on the basis of several factors like the car loan interest rate, add-on perks, processing fee, etc.
Different loan providers offer different interest rates and it’s one of the biggest factors you should take into account. This is because even if you are able to save 1% on that, you can save thousands of rupees easily as you pay the EMIs over many years, and a lot of times you spend more than half of the principal amount in interest.
2. Accepting the First Offer
It’s not easy to get a car loan which is why when people do get one, they accept it immediately without giving it any thought. However, that’s something you must try to avoid at all costs.
Even if your bank has told you the standard car loan interest rate, you shouldn’t assume that there is no scope for negotiation on that. Not only it’s possible to get a lower interest rate than advertised, smart people negotiate all the time and get the best deals in the market. That said, you must understand that not everyone qualifies for a better loan rate.
Here is the thing- banks want to approve loans for those who have a high creditworthiness. So, you can check your free CIBIL score and see what where you stand at. If yours is above 750, then it’s considered a good score. If it’s above 800, then it’s excellent as the highest score that you can achieve is 900.
If your score is high, then you have the upper hand when negotiating with the bank. So, you can tell them that you have been a responsible credit user which is why it’s only fair that you get a better rate than others. If you are a loyal customer of the bank, then you won’t have any problem in getting a good deal.
3. Not Checking the Credit Report
It’s really important that you check your credit report before applying for a loan. It doesn’t necessarily have to be a car loan either.
Checking your report in advance allows you to prevent application rejection or further damage to the score itself. For instance, if your credit report shows that you have applied for a loan many times in a short period, then it can suggest that you are “hungry” for credit and the bank may reject your application. This can hurt your score too. On the other hand, if you notice that your free CIBIL score is high, then you can apply for the car loan at the best bank and even get a chance to negotiate on the interest rate.
There is nothing wrong with taking a car loan. In fact, it’s unwise to spend all your savings on a luxury. However, you don’t want to spend more money than you have to. You just need to do your homework and wait for the perfect time to send the application. It’s also a good idea to keep an eye on your credit report so that you already know how high or low your creditworthiness is at present. Good luck!
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