Having qualms about the process of first-time car buying is an established fact. The uncertainty around getting it right without prior experience could be equally exciting and pressurizing for a first-timer. With so many alternatives to choose from, finding a car that fits one’s personal preferences and budget requires time, accurate research, and careful deliberation. And given the heavy expenditure involved, you would want to go for the right car loan provider, thereby forcing you to study and compare various car loan interest rates offered in the market. Here are a few tips to max out on your beginner’s luck for car loans:
- Choose a car that fits your pocket
Research is always of added value when it comes to good buys. Narrowing down favourable options of automobiles is the foremost job. However, personal budget and ownership costs go a long way in deciding the final model.
- Keep in mind the necessary expenditure
There are costs that one cannot avoid legally no matter how hard one tries. Car insurance, fuel, tyres and maintenance charges would be the unavoidable expenses to be incurred by the car holder on a regular basis. Therefore, it becomes necessary to consider these inevitable, added expenditures while charting a sound bugeting plan.
- Establish a realistic budget
A realistic budget takes into consideration of what you can afford to pay as car loan per month. It is necessary to look at your cost of living, taking into account all the unavoidable expenses such as food, shelter, accommodation, and of course, the happy hours. Once these are calculated, you can use the remainder of the monthly income towards your car loan payment. Therefore, budgeting is one of the most challenging tasks to be accomplished in the entire car-financing process.
- Know your credit score
If you intend to seek car financing through a loan provider, getting to know one’s credit score is recommended. The Credit Information Bureau India Limited (CIBIL), Experian and Equifax— all provide credit reports that can help you assess your credit worthiness. . By doing this in advance, you won’t have to waste your time and energy at the loan provider’s office. A good credit history, in many cases, is the deciding factor in the sanction or rejection of an auto loan application. The three-digit number is studied by lenders to determine one’s credit worthiness for a car loan. The lower the credit score, the shakier the lender is about loaning the amount and, therefore, higher the interest rate. When it comes down to talking a final deal, being able to say that you have an excellent credit score, or prove it with handy print-outs (although the lender will look into your score anyway), may benefit you in getting a lower interest rate and could even fetch a few dealer incentives.
- Avoid too many inquiries into your credit score
Too many car loan applications with multiple lenders within a short span of time reveals a credit-hungry behaviour. Lenders do a hard inquiry on your credit report to decide on approving your car loan application. So, multiple inquiries can lowers one’s credit score.
- Shop wisely for the perfect source of funding
Go online to find out the interest rates on offer by banks. Further, contact dealerships to know the offers available on the car and accompanying accessories. Being aware of any manufacturer-specific, promotional subsidized rates that might be in effect during a specific time period could put you in a stronger overall position when it comes to negotiating the final price of the car.
- Take a test drive
If you are going to spend the next couple of years paying off the loan on a car, it is almost pointless to settle in without a test drive. In fact, nothing is more critical in one’s decision-making process than how it feels behind the wheel.