Factors to consider while taking car loan

Its a beginning of a new year and many people plan to buy the new car around this time. Moreover lot of new models availability, BS-IV related discounts, electric vehicle buzz and interest rate on the downside in so many years may prompt us further and make the deal sweeter. Economy on the downside and with number of dealers getting bankrupt may give you a good chance to negotiate a good deal for a new car.

Now before you jump in joy, please remember that car is a liability if taken for a personal usage.

Below are the few factors, one need to consider before arriving at a decision to buy a car on a loan.

Car Price – Negotiate as much as possible on the car price for discounts so that while taking loan it helps in reduced EMI

Tenure—Choose shorter tenure to ensure faster repayment and less total interest outgo. Balance between high EMI’s due to shorter tenure and other financial goals.

Loan amount– Choose as much lower loan amount as possible to reduce interest costs. Balance between down payment and other investments to make sure that down payment need not come at cost of other goals

Lower interest rate – Banks offer lower interest rate as compared to NBFC while getting a loan from NBFC is faster and easy. Some banks allow registration cost, insurance amount, accessories cost to be included as part of loan amount. Also check the difference between interest rate for female borrowers to take due advantage

Processing fees – Try to negotiate as much as possible on processing fees as it can dent your pocket by 5-10k easily. Be aware of seasonal waivers on such fees while availing loan

Prepayment charges – Choose a bank which allows you to prepay the loan with minimum charges. Check on the number of times you can prepay and on the amount that can be prepaid

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