What are the Do's and Don'ts for Taking Car Loan in India - CRED
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what are the do's and don'ts for taking car loan in india

what are the do's and don'ts for taking car loan in india

if you're planning to buy a car with the help of a car loan, you need to read through this article to understand the do's and don'ts while securing the loan
finance
February 15, 2021
5 min read
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what are the do's and don'ts for taking car loan in india

source: photo by goutham binuraj on unsplash

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today owning a car is necessary for every household who can afford to buy it through their savings by paying a down payment or finance it through a car loan for a certain amount.

although every private and public sector bank offers car loans nowadays, the list of features and benefits covered varies for each bank. thus, making it crucial for you to find the lender who fits your requirements.

however, they also share certain similar features.

common features and benefits provided by banks on car loans

  • repaying a loan can be done over a long time (usually 5-10 years) based on your financial background and the loan agreement.
  • the maximum value of the car loan is the 100% on-road price of the vehicle.

before you apply for the loan, read below to understand the points you need to take care about to stay on track with your financial goals.

things to remember or research about before availing a car loan

  1. know which lender best fits all your requirements by comparing the car loan plans from all the possible banks and nbfcs. it will also help you understand whether you have an option of floating or fixed interest rate on loan.
  2. check your credit and cibil score. it is crucial to clear off all the outstanding credit card dues and existing loans to improve your score. it makes it easier for you to get a car loan. you can find out if you're eligible for the loan through the car loan eligibility calculator.
  3. selecting the correct car is of utmost importance. if you have just begun your career, an expensive car can make it difficult for you to repay the loan. if you feel that your financial conditions cannot let you buy a luxurious car, do not take a loan to buy it because you will face difficulties repaying the loan.
  4. considering your financial capabilities, you should select the right tenure (number of years to repay the loan) and loan plan. you can calculate the affordable emi value through the car loan emi calculator.
  5. read the terms and conditions carefully. every loan plan has different terms and conditions. reading the fine print will aid you in opting for the loan plan that fits your requirements.
  6. buy car insurance as it helps you at least partly cover your expenses in case of any damage to the car due to an accident or unforeseen circumstances.

things to avoid while securing a car loan

  1. miscalculating what you can afford: one ideal way to avoid this is using a car loan calculator.
  2. choosing the first loan plan offered by your car dealer: you must look for other possible options in the market before selecting one. there are chances of getting a loan at a better interest rate if you're a long-standing customer with a good record.
  3. borrowing from multiple lenders: it can negatively affect your credit score.

conclusion

these are a few points that you must remember while taking a car loan regardless of the bank or nbfc. it will also help you select an appropriate loan plan for purchasing your vehicle.