How To Score A Great Car Loan
Most of us cannot afford a car on down payment. Those who can, may God bless them and give us their bank account details. ;) Until that wish comes true, the majority will resort to financing their car purchase with a car loan. But, availing one is not so simple. There are so many rates and terms to keep an eye on. We say, relax, concentrate on these five terms. Do so and you can score a really affordable (read cheap) loan.
- Use Your Credit Score
Banks use it gauge your repayment capacity. Those with a high score can use it to their advantage when negotiating for lower car loan interest rates. Most banks will listen to you because a credit score is a vital tool for them to evaluate loan applications.
- Choose Tenure with Caution
When you avail a loan for a car, remember the interest rates will change according to the tenure. The rate and tenure are inversely linked. Do not go for a longer tenure just to lower the rates — you will have to keep repaying the loan for a long time. Remember, any default will lead to levy of fines and unnecessary hassles.
- Shop Around
Visit curation websites which list banks and the interest rates they offer for various car models. You can also choose to go with captive lenders, bank and car maker tie-up, and NBFCs. Each offers different features and rates, more options for you.
- Fix your Rate
On offer are two interest rates — fixed and floating. The former stays the same for the entire loan tenure while the latter keeps fluctuating because it is linked to a base rate. Go with the fixed because a floating rate can see an unprecedented rise due to market conditions.
- Show your Bargaining Skills
When you are in talks with the bank’s executive, remember they have targets to meet. Negotiate with the banks on terms such as processing fee, interest rates, and foreclosure charges. If you do not negotiate, do not expect any form of discounts from their end unless advertised.