When you apply for the car loan, you need to check few things including interest rate, processing fees, prepayment charges and other documentation fees. You can avail the cheap car loans from banks, financial institutes and from your car dealers. If you want to avail the loan from bank, then you need to fill many documents and it generally takes a lot of time. Afterwards there is no security for loan approval. Car dealers can easily offer loans but they charge you maximum rate of interest and you have to spend almost the double amount compared to the price of your car. The most convenient car loan is available in the online portals and you can avail these loans from their portals directly. They will charge you less interest and the whole processing will take few hours only.
How do you prepare yourself for cheap car loans?
When you are negotiating with your lender you must be armed with the rates of interest and the number of monthly installments that other institutions are offering, this way you will be able to deal with them more confidently and strike a deal that is beneficial to you.
- The first criteria that lenders will consider while fixing your rate of interest will be your income. Bring along with you all the relevant documents that indicate your income. Lower rates of interest will be charged for those who have job stability.
- Going to lenders with a fixed dream car on your mind may tempt them to manipulate you into high rates of interest. It is always better to have multiple choices as this would give you the flexibility to walk away from a bad deal. Unless you wish to buy a rare car, you will be able to find many similar types of cars around.
- Loans offered by dealers, credit unions and banks may be good; it all depends on the institution or the business. Think of the advantages of borrowing money from each one of them. It could be convenient for you to borrow from a particular institution though its interest rate may be high.
- First of all, the lending institution should be convinced that it is giving the loan to the right person and it stands a good chance of recovering the loan as well as the interest amount for which you will have to enter into a written agreement with them, in which you agree to all their terms and conditions. From your end, you must ensure that you are getting the best in terms of interest and monthly installments.
Taking loans from the dealer can also be considered, apart from being convenient they could also have schemes which could keep your car on the road. Collect all the information that they offer along with their loans, but be careful about the ‘add-ons’ that go with the offer as they may not be of much value. Loans offered by banks may have lower interest rates, if you are using multiple banks it is advisable to compare their interest rates and choose the lowest one. Interest rates will depend on how long you take to repay the loan amount; shorter payback time will result in lower rates of interest.
You must evaluate your financial position and plan accordingly. Try to make your down payment as large as possible as this will reduce the time taken for repayment of the loan thereby reducing the rate of interest.
If you are armed with more options it will be possible to walk away from a bad deal, this will be possible only if you have done your homework thoroughly. You can always go to another place where you will get a better deal. By going through the above points you can see that getting a cheap car loan may be a bit tedious but it is certainly possible.