Buying a new car is one of the most important financial milestones for any person. Everyone has a dream car or a car for which they have been saving for a long time. It is more than just a possession or an asset. A car is a status symbol and a sign of accomplishment, providing a sense of luxury and happiness. However, you need not wait for very long to make your dream come true. You can avail an auto loan from a reliable lender in India.
The number of people buying cars in India has surged significantly after COVID-19 pandemic hit the world. People want their personal conveyance to go to their offices, to run errands or to safeguard the transportation of their families. This necessity of owning a private vehicle has led to people purchasing second vehicles too. You can now easily avail a second-hand car loan through a popular bank, NBFC or lender in the market at a desirable interest rate that not only helps you accomplish all of the above but also is cost effective. The documentation required to avail these loans are minimal, and almost the entire process is online. In this article, we will be discussing important things to keep in mind while availing an used car loan.
5 Important Things to Keep in Mind before Taking an Auto Loan
1. Rate of Interest
It is one of the most important factors to look for while applying for an auto loan. Even a small difference in the interest rate can result in a substantial difference in the total amount you pay to the financial institution. Reputed lenders like Muthoot FinCorp Ltd. offer amazing auto finance at a relatively low rate of interest.
You will have to do some research to find the best offer available in the market. You can also take the help of an online EMI calculator for an auto loan or second-hand car finance to assess the final EMI to be paid for different interest rates.
2. Hidden Charges
The total amount you end up paying is not only dependent on the rate of interest on your auto loan. There are multiple hidden charges in the agreement which might create trouble for you later. Some small financial institutions try to hide some extra charges within the agreement’s fine prints. These hidden charges may include the processing fees and other charges.
Read all the documents carefully and even consult with someone who knows about these agreements’ legal aspects. This small effort will help you a lot in the future as this will prevent the financial institutions from increasing rates of interest in the middle of the tenure or to charge unnecessary fees from you. Always trust reliable financial institutions that provide transparency in their transactions.
3. Tenure of the Loan
Generally, the tenure for an auto loan is somewhere between 5 and 7 years. However, you can get the tenure increased by applying for the same to your lender. Increasing the repayment tenure reduces the monthly EMI that you have to pay while decreasing the tenure increases the monthly EMI.
The option of increasing the tenure to reduce the monthly EMI seems very attractive due to the reduced stress in the short term. However, you will pay more money in the form of interest to the financial institution.
4. Flexibility of Repayment
Repayment flexibility is an added benefit, and you should make sure that your loan agreement has a clause for the same. Having flexibility in the mode and tenure of repayment gives you enough breathing space to keep your finances in order without attracting hefty fines from your lender.
Make sure you don’t incur huge penalties for missing just one month of EMI. Also, see that if there are more than one modes of repayment available or not.
5. Customer Service
It is one aspect of the agreement that no one cares about initially, but you need to make sure that your lender has a sound customer services department. In the repayment tenure, you will need assistance from your lender frequently.
Auto loan or a second hand car loan is now straightforward to avail. Just keep the points mentioned above in mind while applying for an auto loan or second-hand car loan to complete your application smoothly.
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