Jun 19, 2016 04:42 AM
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Cars have become an important part of our life and buying one has become easier. With a number of auto loans on offer, buying a car is now relatively straightforward. However, one needs to keep in mind some simple things before seeking a car loan.
Negotiate the car price - It is often overlooked, but the best way to bring down the cost of a loan is to negotiate the price of a car. Dealers have a sizeable margin on every new car sales and you would do well to get some discount. Approach multiple dealers for your car and check out the offers and discounts available. In the end, if the total price of your car comes down, the amount needed as a loan would also drop.
Shop around for the best rate - Like you do with your car, shop around for the best deal possible for your bank loan. A car buyer often tends to pick up the loan offered by a bank the car dealer has tied up with. Dealers often discourage a car buyer to seek a loan from any other banks, but in most cases the loan deals with a dealer is often not the best available. Talk to different banks and the chances are you will come across a loan that is far more attractive than what your dealer was offering.Do your homework well and try and get a loan lined up before you zero in on actually purchasing your car.
Check your credit reports - Check your credit reports before you think of getting a loan. There may be discrepancies in your credit report that may be affecting your credit profile. This can in turn lead to a bank quoting higher interest rates for you. If you do find out any problem with your credit report, get in touch with the rating agency to sort out the matter. Knowing your credit profile also helps you to gauge where you stand financially and ensure banks do not quote you an unnecessarily high interest rate.
Choose the shortest loan tenure you can afford - Do not make the tenure of your loan unnecessarily long. A car loan is a not a productive debt and you should try and repay it at the earliest. While a longer tenure would mean you EMIs are lower, if you can afford it, try and opt for a loan that is in the range of 3-5 years. This would mean the total outgo in terms of interest would be far lower. Desist from the urge to buy an expensive car and opt for longer car loan tenure. For example car loans for seven years makes very little sense as it increases the total cost of buying the car significantly.
Avoid the extras at dealers - Buying a car may not be the end. Many a times there are a number of accessories that add to the cost of the car. Accessories may include anything from an audio system, to central locking to gear locks. If you are taking a car loan you may also want to factor in the price of accessories and the subsequent down payment you can make for your car. You should never buy accessories from the car dealer since the price at a dealer is often significantly higher. Buying it from a good accessory shop outside the car dealership maybe the smart thing to do.
