Are you eyeing that sleek design of a new car? The excitement must be palpable. In our fast-paced life, a four-wheeler has become a necessity. But before you get lost in those glossy brochures of the latest models, it’s important to understand that buying a car is a substantial investment. Many buyers opt for car loans, but remember, not all loans are equal. So, here are a few things you need to keep in mind before opting for a car loan. 


  1. Your CIBIL Score

CIBIL Score is the first and most important factor to check before applying for a car loan. It is like a report card that will decide whether you are eligible for a loan or not. This three-digit number is honestly your ticket to get a favorable car loan. A higher score means low-interest rates and higher loan eligibility. Ideally, your aim should be to have a score of 750 or above but don’t stress over a lower score. Some lenders offer favorable services like Valley First Credit Union Auto Loan, making getting a car loan easy even if your CIBIL Score is lower. You just need to find the right lender to start your financial journey. 

  1. Check Interest Rate

Now comes the main part, which is the interest rate of your car loan. It is the fuel for your loan journey that impacts your monthly EMIs, the amount you must pay every month for your loan. Take a look around the market, research the current market rate of interest, compare the interest rates offered by different banks, and then make a final decision. Every decimal point matters, so you must scrutinize the rates mindfully and diligently. Remember, there are various types of interest rates; that’s why the rates can differ from bank to bank. Finding even the slightest difference to make huge savings is highly recommended. 

  1. Loan Repayment Tenure

The repayment period of your loan is a critical decision that you need to make before applying for a car loan. Longer tenures have lower EMI rates, so opting for a more extended repayment period may seem tempting. But you need to keep in mind that extending your loan tenure can inflate the overall interest paid. It might reduce your monthly burden but will increase the interest rate you have to pay over the years. On the other hand, opting for a shorter repayment period will save you money and can also secure a lower interest rate. You need to find the balance between how much you can afford as monthly payments and the minimum interest rate you have to pay over this period. So, don’t get tempted to opt for a longer period of repayment; instead, decide wisely for a shorter repayment period to save money. 

  1. Processing Fees

Almost every lender charges a fee to process your loan application. This fee varies from lender to lender. While some can offer low interest rates, they might have a higher processing fee. You need to check with the lender or the bank if they are charging you any processing fees. The wise decision would be to negotiate with them where you can, or you can choose to wait for promotional periods when some banks or lenders waive their processing charges. 

  1. Special Discounts and Schemes

Buying a car and opting for a car loan both need patience to get the best in the market. Don’t rush yourself to get a car loan without doing thorough research. Many banks and lenders often roll out special offers and schemes during festivals. These schemes come with perks like waived fees and lower interest rates. Keep an eye out for such offers to get the best deals, which will eventually help you save money in the long run. 

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Concluding Thought

Opting for a car loan might seem overwhelming, but with a little bit of patience and thorough market research, you can crack the best deals. The factors mentioned above will help you with what to consider while choosing a car loan. So, make a checklist before you start your journey and plan according to your budget, goals, and peace of mind.