How to Choose the Best Car Loan in India

Snneha Lukaa May 1, 2019

Most of us have dreamed of buying a our dream car since childhood; but unfortunately, for many, this dream never comes to fruition due to financial constraints. If you’re looking to purchase a car, you should consider taking a personal loan to avoid disrupting your finances.Below, we’ll discuss how to get the best price on your car, as well as what to keep in mind before selecting a car loan.

1. Choose Your Car

Your first car is a special milestone moment, so think about your requirement: do you want a premium car, or a simple one that gets you from A to B? Do you need a six-seater for your family, or will a small city car would do?The requirements of each person are different and the choices on the automobile market are plenty; therefore, invest the time at this moment to consider your options. There are plenty of resources online to help you make an informed decision on the pros and cons of every car you might be considering.

2. Negotiate The Car Price

Car dealers generally have huge profit margins on any sale they make. Try and negotiate the price of the car as minimum as possible. Many dealers will offer discounts and offers, which may reduce the price of your car which invariably reduces the loan amount you have to borrow. Check out a variety of dealers to compare the prices and choose the best option.

3. Know Your Credit Profile

Before opting for a car loan, you need to know your credit history. Your rate of interest, tenure and the loan amount offered is all determined by your credit score and report. Any discrepancies in your credit history needs to be checked and resolved. These discrepancies may make the banker or NBFC offer you a higher interest and lower loan amount.

4. Consider All Variables Carefully

A car dealer may push you to take out loans from banks which they have tie-ups with, and these may not necessarily be the best option to go with. When you consider your available options for a car loan, you also need to take into account consider your financial situation.This is because while you will end up saving on interest paid by opting for a loan with a shorter tenure, your monthly EMI burden will be significantly higher than if you were to opt for a longer tenure. Most borrowers prefer to pay off their loan quickly by opting for a shorter repayment tenure. However, if they cannot comfortably afford the EMIs, they will end up defaulting on repayments which negatively impacts their credit scoreTherefore, ask yourself: are you financially secure enough to pay heavier EMIs for a shorter tenure , or can you only comfortably accommodate a lower EMI in your monthly budget? If your finances are on the tighter side, you should opt for taking a longer tenure, since it will be easy to repay your EMIs without creating a dent in your finances.

5. Avoid Buying Car Accessories From Dealers

Many dealers will not include accessories like audio systems as part of the car price. These are considered additional fixtures which might cost more at the dealer’s. You can get the same accessories from reputed auto shops at a much lower rate, which will reduce your overall loan amount that is borrowed.

Owning a car is a very special dream for most Indians, and for most, it is a far-off one. Luckily, a car loan can help make this dream a reality, without breaking the bank. Be sure to consider your financial situation in order to choose the loan that will best suit you. Depending on the loan amount and interest rate, only go for a short repayment tenure if you are absolutely certain that you can repay the monthly EMIs with ease.

Snneha Lukaa

May 1, 2019

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