Mistakes to avoid when purchasing a car through a car loan in 2020

Buying a car loan is not just getting a loan at a very low price but a whole nitty-gritty that can make your life easier. These days, you can easily get a car loan as the Indian car loan market is growing rapidly and is expected to grow at a tremendous rate during the 2020-2025 period. However, do not make any mistakes in your haste to apply for a loan, and the list below some common mistakes to avoid rejection.

• # 1: Not Knowing Your Credit Score

Credit points are an important factor that forms the basis of a loan agreement. As mentioned above, high credit scores give you room to negotiate interest rates with lenders. If you have a high debt ratio of between 750 and 900, then it will be easier for you to get a car loan and that will have a lower car loan interest rate. Therefore, it is important to check your credit score before going to a lender. If you find that your credit score is low, start by working on it honestly, building your credit score, and applying for a car loan, to avoid high-interest rates. 

• # 2: Lack of other financial options

You should not rely solely on the 100% financial option offered by most banks and NBFCs. You have to have other financial options, so you can pay the remaining amount that leaves the price of the showroom behind. Therefore, before applying for a car loan from your bank or other NBFC remember to plan another payment method, which will be financially itself. Registration fees, insurance premiums, and low fees need to be funded by you with your savings.

• # 3: No negotiation on interest rates

A high credit rating puts you at a disadvantage when it comes to negotiating interest rates with your creditors. The interest rate depends on several factors such as debt, down payment, principal amount, etc. If you do not know these things, you are more likely to get a car loan from some greedy lenders. Therefore, it is always recommended that you do your homework before meeting with lenders.

• # 4: Searching for a Long-Term Loan

While long-term loans have fewer EMIs, the interest rate you will have to pay in full will be higher compared to short-term loans. Therefore, avoid short-term EMIs by staying longer and instead try to get rid of your loan as soon as possible as it can save you extra money. But consider your financial skills whether you can afford to pay high EMIs over a short-term loan or not, otherwise, you will start to make a mistake.

• # 5: Prepayment Fees

Read the terms and conditions of the loan carefully before signing the documents. Many banks and NBFCs charge other fees, if you choose to repay your loan before the end of your loan term, that means the loan is closed. While some banks, on the other hand, do not have prepaid bills that can save some money. Therefore, it is best to seek out banks and other lenders who will not charge you with early repayment.

• # 6: Not checking online platforms

This is probably the biggest mistake you can make by not looking at a car loan online. Many online lenders offer loans at the best interest rate. Before filling the SBI Car Loan Application form please check other platforms. Also, getting a loan on online platforms is quite easy as these days most of the activities are done online. Save your time, and help you maintain a good deal in the market. You can get several deals from different banks and lenders, but a little attention is needed at the moment.

• # 7: Buying unnecessary services

Most lenders try to sell you additional services such as guarantees, life insurance schemes that can repay your loan in the event of your disability or death. Experts believe that while these services are helpful, these services are usually included in a loan that you should check with the lender before signing the loan form. Therefore, these services are for the benefit of lenders and not for borrowers.