Important Things to Know When Taking a Car Loan

People in India desire their own vehicles almost as soon as they land a good job to ease their commute or as a fashion statement. However, at the forefront of fueling this desire for automobiles is the banking sector, which has become more than happy to extend car loans or auto loans to eligible customers. Both Banks and NBFCs offer car loans at competitive rates to meet the increasing demand for these loans.

The increasing purchasing power amongst people and the availability of car loans, has translated into an increase in the purchase of cars across the country. However, owing to the vast availability of car loans, when deciding to take a car loan, customers should consider the following to ensure that they obtain a car loan that’s right for them.

  1. Car Loan Interest Rate

Ideally, potential customers looking to get car finance should scout as many lenders as possible to ensure that they get the lowest auto loan interest rates. Getting the lowest car loan interest rate can ensure that customers save quite a bit of money since taking a car loan with higher auto loan interest rates can mean that the overall cost of the car goes up. Car finance is a booming business in India and is also becoming increasingly competitive. Hence, customers looking to avail car loans should make sure they check out at least a few banks to ensure that they have the opportunity to obtain an auto loan with the lowest auto loan interest rate.

  1. Processing Fee

The processing fee that is charged when one takes a car loan is a onetime fee. However, this fee varies between lenders. One must ensure that he/she is not hit by a huge processing fee on the car finance since a large processing fee can increase the overall cost of the loan.

  1. Pre-payment Fee

Some lenders charge a fee if and when the car loan is repaid ahead of schedule. Sometimes this fee can be about four to five percent of the entire loan amount. This can be quite a large added expense, and therefore, if customers feel that they will be able to repay the car loan before time should ensure that they take a car loan that comes with a zero pre-payment charge.

The above factors are important when deciding to take a car loan. Borrowers looking for the best car loans must evaluate the auto loan interest rates and fees and surges in the loan offer, amongst several lenders to choose the car loan that best fits their purchase needs.

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