car loan on your mind? 5 tips to avail best interest rate offer
buying a car has become really simple nowadays. many public and private banks in India offer car loans at attractive interest rates. in fact, car loans are available at much lower interest rates compared to unsecured loan products like a personal loans. you can use the CRED car loan calculator to compare interest rates offered by various financial lenders.
before taking a car loan, you need to select the brand and the model of the car to find out how much financial aid you will need. note that many financial lenders offer up to 80-90 percent of the car’s on-road price. some of the banks also offer up to 100 percent of the car’s on-road cost subject to terms and conditions. however, it's highly suggested that you should try to clear as much downpayment as possible to reduce your monthly car loan EMI payout.
many banks also provide pre-approved car loan offers on selective credit cards. you can consider checking out car loan offers on your existing credit card as well.
once you have calculated the car loan amount, the next step is to find out your eligibility for the loan. most financial lenders provide car loan eligibility and interest rate details on their official website but you can also call the customer service or visit the nearest branch to find out car loan details.
you can choose to submit your car loan application form through the official website of the bank or visit the nearest branch to submit your documents. some of the basic documents required for a car loan include - income proof like salary pay slips/income tax return receipts; and identity proof such as voter ID card, Aadhaar card, etc.
The car loan application process has become much easier nowadays, however, to get the best car loan interest rate you need to consider some of these important tips:
#1: monitoring your credit score
your credit score has a big impact on the car loan application approval. you should start monitoring your credit score at least 6 to 8 months prior to applying for a car loan. having a higher credit score improves the chances of securing a better pre-approved car loan. those with a credit score of above 750 have high chances of car loan approval and at the best interest rate. all financial lenders check the credit report of applicants before approving any loan request. hence, it is highly suggested that you should start monitoring your credit score yourself in advance to improve your score in case it's below 700.
#2: compare car loan interest rates
different banks offer different interest rates on car loans. from time to time, banks also launch some additional offers on car loans. so, it's always better to check and compare the interest rate and other offers by various banks. you should also note that the amount of car loan sanction also depends on the vehicle model, repayment capability, financial status, and credit score of an applicant among other things. banks are likely to provide better interest rate and fast approval to the existing account holders considering he/she has a good repayment history. but it does not mean that you should not explore other banks and financial lenders to check the .
#3: check out the car loan processing fee
car loan processing fee is one of the most overlooked aspects when it comes to choosing the best loan offer. most of the banks charge a car loan processing fee of around 2 percent or more of the entire amount which means you may have to spend thousands of rupees extra. check the car loan calculator to find out how much difference it can make. however, during the festive seasons, most the banks offer car loan processing fee waivers on the entire loan amount or reduce this car loan processing fee in some cases. it's highly recommended that you should wait for the right time and right offer before buying a new car.
#4: select a car loan with minimum pre-closure charges
most car loan products come with additional foreclosure or pre-closure charges. so in case you want to foreclose your car loan or make prepayments to reduce the overall loan interest, you will have to pay two to five percent of the remaining principal amount depending upon the agreement set by the bank. hence, it is highly recommended that you check with your financial lender about foreclosure charges at the time of availing of the car loan. try to negotiate and opt for a car loan that has minimum pre-closure or foreclosure charges.
#5: balance between car loan duration and monthly EMI
balancing between car loan duration and monthly EMI can be really tricky. if you increase the car loan duration your monthly EMI burden will lower but you will increase your overall interest amount. on the other hand, if you keep the car loan duration too short, the monthly EMI will increase. therefore, it is very important to opt for an EMI which charges reasonable interest so that not only your overall interest payout is reduced but at the same time, it does not impact your other monthly expenses.
you can use the CRED car loan calculator to find the right balance between the EMI installment, tenure, and principal amount. you can also use this calculator to compare the car loan interest rate offered by various banks.
how to use the CRED car loan calculator?
using the CRED car loan calculator is very simple. you just have to select the car loan amount, rate of interest, and tenure for which the car loan is sought. the calculator will automatically display the approximate EMI applicable for the selected variables.
you can increase/decrease the loan amount/rate of interest/loan tenure to compare car loan offers by various banks. you can also find out the overall principle and interest amount payable for the selected tenure and interest rate.
use the CRED car loan calculator to make an informed decision.