Several important factors should be considered before taking out a car loan. Interest Rate: Currently, banks offer car loan interest rates starting from 8.70 percent.
However, these rates may vary based on loan tenure, credit score, and down payments. It’s essential to compare interest rates from multiple banks online rather than relying on a single bank.
Another crucial factor to consider is your credit score. A higher credit score can qualify you for a lower interest rate on the loan.
If your credit score is below 750, it’s not only advisable but highly motivating to work on improving it before applying for a car loan. This could significantly reduce the cost of your loan.
Loan Tenure: To minimize the interest paid, it’s recommended that the loan be repaid within a shorter period. While some banks offer loan repayment periods of up to 7 years, longer tenures result in higher interest payments. Consider clearing the debt as soon as possible to avoid excessive interest costs.
Fees: Be mindful of processing and prepayment fees banks charge. Some banks may impose high processing fees despite offering low-interest loans. Before taking a loan, consider these additional costs to avoid future issues.
If your loan application is rejected, it’s not just important, but it’s crucial to understand the reasons for rejection before seeking a loan from another bank.
This understanding can help you avoid taking loans from smaller banks with high interest rates, which could lead to financial burdens.
The current car demand is increasing, with approximately 4 lakh cars sold nationwide in January. Banks offer lower interest rates for borrowers with a credit score of 750 or higher.