4 aspects to consider when applying for a Loan

Have you been spending considerable time waiting at the bus stop or train/metro station? Or have you let bus after bus, train, or metro pass by due to the rush? It is time to consider buying a car. Vehicles let you travel anywhere conveniently at your preferred time. You can sit comfortably and enjoy the journey to the destination. People wish to buy a car but hold themselves back because of the finances.

 If you want to buy a car and are holding yourself back, apply for a Car Loan to finance your car purchase. A Car Loan provides the desired financing at a competitive interest rate. You can easily repay the Loan in equated monthly instalments spread across your opted tenure. Here are some personal and bank factors to consider when applying for a Car Loan:

Loan amount offered

Every bank offers a different Loan amount. The bank considers your eligibility to extend a suitable Loan amount. Income and credit scores are key factors that make or break your Loan eligibility. A good income translates into a decent repayment capacity. The bank may readily offer you a significant Loan amount as they are confident you have the repayment capacity to manage it.

The credit scores speak about your credibility as a borrower. A higher credit score reaffirms your credibility as a borrower before the bank. Hence, the bank offers a fair Car Loan amount, believing you will not default.

Interest rates

Every bank offers a Car Loan at a different interest rate. Explore the market and learn about various bank interest rates. Apply for a Loan with a bank extending the lowest interest rate. This translates to lower interest liability, making your Loan repayment affordable. Furthermore, the bank considers your eligibility factors to extend a suitable interest rate.

As mentioned, a credit score is a key factor in your eligibility. An excellent score is like an ace of spades helping you negotiate with the bank for a better Car Loan rate.

Tenure

Almost all leading banks provide a Car Loan for any tenure of up to five years. Consider your repayment capacity to determine a suitable term. Typically, a longer tenure translates into a reasonable EMI amount, which you can pay without struggle. However, a longer tenure means significant interest liability. Typically, people prefer bearing a high-interest liability than struggling every month to keep up with EMI payments. Decide based on your suitability.

Loan charges

Every bank needs you to pay a set of Loan fees upfront. This includes Loan application processing fees, document verification fees, and other charges. Since these Loan charges add to your total Loan cost, the more nominal they are, the better. Leading banks may waive off a few charges depending on your relationship with them.