There are many firsts in life, for which almost everyone needs a little bit of help. Buying your first car is one of them. It could a hugely liberating experience – no more wasting time at bus stops or negotiating with autorikshaw drivers or taking multiple modes of transport on your office commute every day. To buy that dream car, a car loan is can come in very handy. Read on how to apply for the best car loan in India.
Things to Look for While Choosing the Best Car Loan in India
Interest rate: Perhaps the most important thing to look out for when considering a car loan is the interest rate. Shop around for the lowest interest rate possible. Even a 0.05% reduction in the interest rate could mean savings of a couple of thousands of rupees in interest costs. Of course, the interest rate also depends on your credit score and other factors, but is advisable to shop around for the best deal.
Fine print: Thoroughly research the various loan offers available in the market. Take care to go through the fine print on the terms and conditions, however tedious it might seem to be. Be sure of the kinds of fees and charges involved, as that might put a considerable dent in your pocket.
Compare financing options: Compare the features and benefits to determine which car loan offer best fits your income and credit requirements. Some banks offer 100% financing for select car models. (Some lender websites have detailed information on the cars available on the market which will help you make your choice.)
You can use an online EMI calculator to determine what your EMI will be for various loan offers and decide what kind of loan you can afford.
What next? Pull out your credit report
Once you have decided on the loan offer, it is vital to obtain a copy of your credit report well before put in your car loan application. You can check your credit score, report any inconsistencies in your report, and work on any areas of credit weakness.
Typically, banks and other lenders look for a credit score of 750 or above to sanction a loan. If your score is below 750, you need to concentrate on improving your credit score to at least 750. Depending on how grave your credit situation is, this can take anywhere from 4-12 months. If you spot any administrative errors, you will need to file a dispute immediately to get them rectifies, so that your credit score is not unnecessarily dragged down.
Once you have a good credit score and a clean credit report, you stand a good chance of having your loan approved. A higher score also means you can avail of more attractive terms, like a lower interest rate, that will lighten your loan repayment burden.
Ok, I have chosen my car loan, what next? Apply for A Car Loan!
Once you have finished with the research on the best car loan available, it is time to apply. You can walk in to the nearest branch of your chosen lender and apply along with all the supporting documents or you can apply online. It is possible to track the status of your application online as well.
Alternatively, if you think you need help with identifying the best loan offer and would like advice on eligibility and assistance with your application, CreditMantri can guide you through the entire process and match you with the loan that suits your credit profile the best.