Yes, an auto loan is meant to help one finance a car. There are several banks and Non-Banking Financial Companies (NBFCs) that provide auto loans to their customers so that they can afford their dream cars with ease. Most lenders finance 100% of the car’s on road price and this is very beneficial for individuals who require a large loan amount for their car.
There are a few things to keep in mind before applying for a car loan:
1. Check your credit score:
A credit score is a three-digit number that acts as evidence of your creditworthiness. A credit score above 750 is considered a good credit score. A low credit score can lead to a loan rejection and this can further negatively impact your credit score. If you have a low credit score, it is always best to improve your credit score first and then apply for your car loan.
2. Shop around:
Since there are various banks and Non-Banking Financial Companies (NBFCs) that offer auto loans, it is best to check each of their features in terms of loan amounts, tenures, interest rates, EMI repayment other and other bonus features. This can help you pick an auto loan that suits your personal needs and requirements best. You can visit various lender websites or check a finance portal like CreditMantri that can help you compare deals from various lenders and help best the best offer suited to your credit profile.
3. Check eligibility criteria:
Different lenders have different eligibility criteria for auto loans. If you have decided on a lender to borrow from, it is essential to check their eligibility criteria to see if you meet them all. Loan rejections can lead to a reduction of one’s credit score and so it is best to ensure that you are eligible for the loan before applying for the same. Age and income criteria should be checked and cleared.
4. Income:
It is best to ensure that you have a steady monthly income before applying for an auto loan. All lenders check your repayment capacity by checking if one is either salaried or self-employed and can provide proof for the same. Pay slips (salary slips) are taken into consideration for salaried individuals whereas, Income Tax Returns and proof of turnover is taken into consideration for self-employed individuals.
To apply for an auto loan, click here.