5 things to keep in mind when applying for a car loan

Auto5 things to keep in mind when applying for a car loan

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From checking your credit score to understanding the terms of financing, here are some of the factors that can help you get the most out of your car loan.

Personal mobility has quickly become a necessity today. Whether you are commuting to work or running your errands, it is essential that you have a reliable mode of transport. Owning a car can bring you some much needed convenience, flexibility, and independence.

However, buying a new car that meets your needs may need a large payment of money. If you don’t have the savings to make the entire payment in one go, it is natural to consider a car loan.

A car loan is a useful financial option that allows you the opportunity to spread the cost of buying a vehicle over time. While you may choose to make a nominal down payment, lenders today offer features such as 100% financing for the value of the car. This means you can get the car of your choice without having to make a large payment upfront. The amount you borrow can be paid back over a repayment tenure that is convenient and manageable.

Let’s take a look at some of the key factors that can help make your car loan experience hassle-free.

1. Check your credit score: Your credit score is one of the most crucial details that play a role in determining your eligibility for the car loan. This three-digit score helps the lender determine your creditworthiness. A higher credit score is likely to get you better terms on your car loan, and vice versa. Review your credit score before you apply for the loan. If you find that your score needs improvement, consider steps that can help you meet your ideal number before you proceed.

2. Loan amount: The next thing you need to know is the loan amount you are planning to apply for. This is likely to depend on the cost of the car as well as other expenses such as taxes, registration fees, and other expenses. It is ideal that you strike a balance – you should have enough to cover the purchase but in a way that ensures that the EMIs remain affordable.

Pro Tip: Use an online EMI calculator like the one offered by Bajaj Finance to get an estimate of your ‘car loan EMIs beforehand. This online tool can help you decide a loan amount that suits your budget.

    3. Loan tenure: Another factor that plays a crucial role in your overall borrowing experience is your loan tenure. A longer tenure reduces your monthly instalments but also means larger interest payments over the course of the loan tenure. On the other hand, a shorter tenure may result in higher monthly instalments but lower interest costs. Choose tenure that aligns with your financial situation and repayment capabilities.

    4. Interest rates: The interest rate on offer impacts the total cost of the loan significantly. Shop around and compare interest rates offered by different lenders and choose the one that suits your repayment capacity best.

    5. Fees and charges: It is also important that you be aware of additional fees and charges associated with the loan. These include processing fees, part-prepayment charges, late payment fees and more. These related charges also add to the overall cost of borrowing. Being aware of these charges beforehand help you make an informed decision and avoid any surprises later.

    Bajaj Finance, one of the most reputable non-banking finance companies in India, offers high-value new car loans that come with simple eligibility criteria and minimal documents. Get a loan of up to Rs. 10 crore and get the flexibility to purchase your desired vehicle without any budget constraints.

    It also comes with flexible repayment options of up to 96 months – allowing you to divide the cost of your new car into manageable monthly instalments. Visit the Bajaj Finserv website today to see how you can use a new car loan to bring home the car you desire.

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