4 Things to Consider Before Signing up for a Car Loan

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These days, purchasing the perfect car is easy. There are numerous models from multiple car manufacturers to choose from. Moreover, thanks to digitisation and competition in the banking industry, you can get a Car Loan quickly and at favourable terms. However, there are certain factors that you should be aware of before finalising a loan for buying your car. Keep reading to know more.

Know the Interest Rates

Your Car Loan interest rate and EMI depends on multiple factors like the model of the car, the loan amount, your credit score and your monthly income. All these factors can heavily influence the interest rate and loan tenure, which in turn impact your EMI. To get an accurate EMI estimate, it is good to use a Car Loan EMI Calculator, which can help calculate your monthly EMI payments based on personalised inputs.

Know the Percentage Loan Amount

ICICI Bank offers Car Loans up to 100% of the car's market price, depending upon the applicant’s eligibility, the condition of the car and other factors. While you may be eligible for a Car Loan of up to 100% of the car’s on-road price, it is advisable to make a sizeable down payment to lower your loan burden.

Fees and Charges

Banks levy a one-time Car Loan processing fee for processing the loan application. The processing fee can be levied as a percentage of the Car Loan amount or based on slabs of the Car Loan amount. Apart from this, make sure you check all the other charges, including the optional ones listed below and add them to the total cost of the loan. Some of the optional charges are:

• Late Payment Penalty

• Charges on prepayment of a car loan

• Swap Charges.

In short, instead of looking at just the interest rate, calculate the total cost of taking the loan including all charges and fees, to evaluate if you have got the right offer from the lender.

Know the Documentation Requirements

Make sure you have all the required documents in place before you apply for the loan. You can easily find the list of documents on the lender’s website. You can even ask the loan officer for the same. If your documents are not in order, it could lead to your loan application being declined, which can hurt your plans of buying a car and impact your credit score as well.

Conclusion

A Car Loan can significantly increase your purchasing power and help you buy the car of your choice. You just need to keep your eyes open and take into consideration the simple but important factors discussed above before signing on the dotted line of your loan application.

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