Owning a car used to be considered a luxury in the past. The ones with a car parked in front of their heads were sure to turn heads. However, as we moved on to a world teeming with technological inventions and economic growth, loans became accessible and thus, getting our hands on materialistic dreams became easy.
Therefore, every second person at this day and age owns four wheels that would ferry them back and forth to wherever they want, thus, making lives more comfortable than ever. Also, if it does not seem too much of a stretch, taking control of that steering wheel does not only add to the status quo, but also serves as a liberating and empowering phenomenon.
Hence, it would do us good to thank loans for all this comfort. However, we need to keep certain aspects at the back of our minds while checking out auto insurance quotes or applying for car loans. This seemingly quick process that requires us to sign a few documents here and there to avail a specific loan amount has an intricate way of working.
It is not as easy as it seems at a cursory glance. Therefore, in order to make sure that you get that loan at the first attempt, and are able to pay it back on time, here are a few essential things you need to consider.
Your EMI Should Be Within The Budget Constraint
There is no use availing a loan amount that you shall not be able to manage. The prospect of buying a car by shelling out a fraction of its actual amount every month sounds lucrative. However, it is a story that has two sides. Yes, it is easier paying instalments than paying all of it at once.
However, you must first check if your loan amount has an EMI that comes within the budget constraint. You certainly have several other financial commitments, and filling instalments for the car loan is just one of the many. Therefore, be very careful while opting for car loans. If the EMI exceeds your budget constraint, it might unleash a web of legal troubles for you.
Opting For A Short Term Loan Is Advisable
The longer the loan term, the higher would be the interest charged on the amount you borrowed. Therefore, be careful about the term of the loan. Try to go for a shorter time so that you do not have to worry about paying an EMI that does not sit well with your budget. Also, while applying for a loan, be careful about the amount you are availing.
Your interest will also vary with the amount. It might not always be possible to dish out money from our pockets and pay the entire amount, which is why we look for loans that would cover at least a major part of the amount. However, it is crucial that you gauge every aspect while applying for a car loan and only then take the plunge.
Look Out For Interesting Offers
Banks try to lure customers into availing their loans and schemes by coming up with various offers at different times in the year. These are offers that you must watch out for. The season of festivals is one such perfect time where banks might be willing to waive off processing charges on loans.
Having a minimal processing charge might sound inconsequential, but they add on to the total cost in more ways than one can imagine. Also, banks might be willing to bend some of the rules regarding these fees and come to the point of a settlement concerning these fees. Therefore, do not be nonchalant about minor costs and look for offers to avail whenever possible.
Look For Prepayment Options
It is always a wise decision to consider prepaying the car loan amount as a car is a depreciating asset and should be paid off as soon as possible. The value of a depreciating asset goes down as years go by, which is why it is not a great idea to drag on the loan for years. However, you must keep in mind that car loans usually come at fixed rates.
You might have to entertain penalty charges if you want to repay the loan before the completion of its term. Thus, the smartest move, in this case, would be to opt for a loan that has reasonable prepayment penalty charges, and not something that cannot even be considered.
Look For Offers From Car Dealers/Manufacturers
Car dealers and manufacturers have tie-ups with banks and financial institutions, which can come handy while buying a car. All you have to do is dig up a little and scrutinise all the aspects. Car dealers might sometimes have loan offers from banks that promise zero down payments or a minimal interest rate.
While it is easy to fall for such lucrative offers, do not be fooled as access to such offers, by default means giving up on any discount on cars. You cannot have it both ways. Settling for zero discounts on a car is better than paying a heavy interest on the principal loan amount. Thus, choose wisely.
The bottom-line of the article is that driving your own car to work or elsewhere in the 21st century is not much of a deal. Banks have adopted an amiable approach towards its customers and are ready to help you out with exciting car loans. However, it shall do you well to not blindly fall for its charm but rather use all your logic and knowledge to have a look at all the dimensions.
The best way to check whether you really need a car loan or not, is by analysing the transportation facility of your city. It is quite easy to end up in the cycle of debt, which is why is necessary that you apply for a car loan only if there is an imminent and absolute need for a car. Measure every move you make before applying for a loan, and save yourself from all the uncalled for trouble that you might find yourself in later.
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