Most Important Things to Consider Before Getting a Car Loan in Festive Season
Buying a car is no longer as costly as it once was. The modern consumer is astute and understands how to take advantage of funding options. Furthermore, because banks and financial firms offer so many car choices, it is now simpler for you to make an informed choice. However, key factors must be considered before making your final choice to get the most out of your car loan offer.
Things to Consider When Selecting a Car Loan During Diwali Offer
Below are the vital aspects to consider when selecting a car loan in Diwali offer:
- CIBIL Score
Look up your CIBIL score before applying for a car loan on Diwali offer. The bank or lender will assess your eligibility and the loan’s interest rate based on your score. While a high CIBIL score will allow you to obtain a low-interest loan, a low score will lead to a higher interest rate and, in some cases, denial. Banks prefer credit scores of 750 or higher. However, if your credit score falls below this threshold, you may still be able to get a loan. Depending on your profile, some lenders will lend you a car loan with a lower credit score.
- Interest rates are low.
The interest rate defines the EMIs you must pay over the loan’s term. Before making any choices, look at the rates given by different banks to seek the most reliable choice. Though the process can be time-consuming, it is vital because car loan interest rates are not standard. After analysing your profile and repayment ability, various banks offer varying interest rates. Furthermore, the rates vary because there are two kinds of interest rates: floating and fixed. Remember that even minor differences in interest rates can significantly impact the EMIs you must pay for your loan, so consider even minor differences to find the best one.
- Fine for pre-closure or foreclosure
Pre-closing your debt means that you have repaid your loan before the preset time and saved a large sum of cash that you would have had to pay as interest. Yet, if you pay a lump sum of cash to the bank against the auto loan before the real payback time, the bank may assess a pre-closure fine on the remaining loan sum, which might dampen your delight. As a result, before picking a bank, find out whether the bank imposes any penalties for pre-closure or foreclosure. Choose carefully, as each bank’s interest rate is different. Pick banks that either do not charge a fee or charge a minimal sum.
- Tax on Service
Most car loan debtors are unaware of the service tax. Banks levy this standard charge on their customers in exchange for their services, and it cannot be contested or bargained. However, the bank may often request that you pay the tax, and if you’ve already consented to the bank’s terms and conditions, you cannot refuse them. Furthermore, while a few banks charge service tax only once, others charge it annually. So, before consenting to the bank’s terms for paying service tax on the loan, inquire how frequently you will be required to do so. If you accept the terms, you must enter into a contract.
- Processing Charge
Almost every bank charges a flat fee to process your car loan request. Even when banks and other entities offer low-interest car loans, they levy a high handling fee. The handling fee varies from bank to bank, and you should ask whether or not the bank charges a processing fee. Banks typically levy a charge ranging from Rs. 2,000 to Rs. 5,000. Even so, you may end up paying a sizable handling fee because banks cost 0.5% to 1% of the loan sum if you borrow Rs. 5 lakh to buy a car. So try to bargain with the bank to lower the fee. During festivals and special offers, some banks will waive up to 100% of handling fees. When seeking a loan, keep an eye out for such offers.
- Offers and Schemes
Don’t be in a rush when applying for a car loan in this Diwali offer. Instead, be patient and keep an eye out for special offers and plans to save some funds. Most banks offer special Diwali offers on car loans or during specific times of the year. Reap the benefits of such offers, including handling fee and pre-closure fine waivers, 100% financing on the vehicle, low-interest rates, special gift cards, and so on. With good credit and a solid profile, you may qualify for customised car loan deals from banks. You might even get lucky and get a car loan with 0% interest. So, before making a final decision, don’t miss checking the offers and plans.
- Car Insurance
When you apply for a car loan in this Diwali offer, lenders may try to persuade you to purchase credit insurance and other extra insurance to make a profit. Even though an insurance policy can be useful for covering your loan payments, purchasing it from a car loan lender is not a good idea. You will not be able to get the best deal on insurance premiums because they will only get insurance from banks and agencies with which they are affiliated. As a result, when choosing a car loan in this Diwali offer, don’t be swayed by the insurance plans given by the lender. Instead, conduct a market study, compare and contrast different policies, and then choose your best offer. If you need to consult with an insurance agent, ensure that the agent has no ties to your credit lender.
Conclusion
Purchasing a car is a significant financial investment that should be cautiously approached. That is why you must consider these factors before applying for a car loan in this Diwali offer. Because financial planning is essential when taking out a car loan in this Diwali offer, you should research the best EMI plans available and ensure that you can repay the loan comfortably. Now that you’re well informed, you can select the best car loan offer option on the market and take a significant step toward owning the car of your dreams.
If you want to know more about the best car loans during Diwali offers, visit Piramal Finance. You may also explore their products and services.