A car is not just a vehicle these days, and it defines the social standing and the financial stability of a person. It is still a dream for a lot of people to get their own car, but now they can get a car with the help of a car loan.
There are a lot of people who do not know much about car loan and are vulnerable to some mistakes. Therefore, to ensure that a borrower does not make any mistake before obtaining a car loan, here are some of them to make you aware: -
- NOT SELECTING A SHORTER TENURE- A borrower should opt for a shorter repayment tenure rather than going for a longer tenure. A borrower does this in order to lower the interest rate, but he ends up paying a lot more than the actual price just because of the selection of the longer tenure. The loan repayment tenure and the rate of interest are inversely proportional to each other, so a borrower tends to choose a longer tenure of repayment to get a lower rate of interest, but it is not beneficial at all. A borrower should choose the shortest term that he is comfortable with in order to minimize the interest outflows and maximize the benefits of the loan.
- NOT SHOPPING AROUND- The smartest and the most important thing that a borrower has to do before applying for a car loan is to research and do all the homework before applying for a loan and even before selecting a vehicle. Selecting a good four-wheeler on a good deal is very important, but arranging reasonable and affordable financing is much more important. Most of the car buyers only focus on the car that they are buying and not on the best deals for the car loan. A borrower must check all the options and the available benefits and then select the car loan, which has the best interest rates and the best features.
- ONLY FOCUS ON EMIs- Most of the borrowers tend to make this mistake. The only focus of them is on the Equated Monthly Installments (EMIs). Some of the car loans offer smaller EMIs and longer tenure of repayment. The one thing that we need to know is just because the EMI looks reasonable and affordable to you, at first sight, does not mean that it is the best option. You need to look at the big picture and all the other aspects too. A borrower has to check how much is the interest that he will pay in total and everything else before selecting a particular option. You cannot make a decision only on the basis of the amount of the EMI.
- SELECTING THE NO DOWN PAYMENT OPTION- This is a common mistake that the borrowers make. Down payment means that you have to pay a certain amount of money at the start of the loan to get your car. However, in some of the loans, there is a ' no down payment option, where you do not have to make the down payment. This option sounds tempting but is not beneficial in nature. This is because the option of no down payment implies that the borrower will have to pay more on the EMIs in the future. In addition, the amount will be higher because there will be a higher interest rate on them. Also, there are some fees and hidden charges that the borrower does not know.
- NOT CHECKING THE ONLINE PLATFORMS: - This is one of the biggest mistakes that a borrower can commit. You have to check the online platforms too, maybe because they will be more easy and affordable. Getting a loan online is easy as compared to the offline mode. You need to check the deals as it is important. Bank of India Car Loan has attractive interest rates.
- BUYING A LOT OF UNNECESSARY SERVICES- Most of the banks or money lenders offer some additional services to the buyer. It may include life insurance schemes, warranties. Though all of these services are beneficial, you should check heir every aspect before applying for a loan.
Also read this: Best Things Of The Car Loan
