The car that you own today reflects your social standing in the society. Earlier owning a car was a luxury whereas now owning a car is a necessity. Most of the financial institutions offer car loans that will help people to accomplish your dream of an owning your dream car.
A car loan is a financial contract between the lender and the borrower and comes with a number of clauses and factors. Therefore, before getting into any car loan deal you must get consider a number of factors and pick the right deal for yourself. This article is intended to bring into light the most common mistakes that people make while choosing a Car Loan for themselves.
Selecting Longer Loan Terms
People usually get attracted to longer tenures to ensure that their EMI is lower. But in the charm of this lucrative offer people often forget that by selecting long tenures they will end up paying more towards the interest component of the loan. Therefore, when you go for car loan see that you opt for the shortest possible term you are comfortable with and minimize the outflow of interest while repaying your car loan.
Focusing Solely on the EMI
Most of us borrow a car loan when the EMI looks smaller. If you rely on the EMI you will end up paying more. Car Loan that may sound cheaper at the beginning will become very expensive at the end. Therefore, you need to not just rely on the EMI to repay but also ask from your borrower to offer you NIL foreclosure charges, or Pre-payment charges and ensure that you pay earlier than your loan tenure and save some cost on the interest. Also apart from seeing the loan EMI, it is better that you look out for a cheaper rate of interest which will help you save a lot of money.
Not Paying any Down Payment
There are many lucrative offers in the market that offer you 100% finance on ex-showroom prices. It may sound really exciting to borrow without making any down payment towards the car loan, however, the point to be noted here is that you will have to pay at some point in time so why not in the beginning itself. Making down payment will cut off the burden of additional interest levied on the loan.
Heart over Mind
Going with what you feel like is a great thing to do in life but not in case of Car Loan. Mostly, people who buy new car set apart a budget for the finance they need. The offers that are often offered to people make them spend a little more than their actual budget. However, it may cause a little unrest in the future while managing your finances.
Not Doing Your Research
Before you choose your car loan it is really important for everyone to do their home loan. Those who apply for a car loan for the first time may get confused but you need to find out the best car loan deal. To look for the best car loan deal in your city or town log on to Letzbank and you will get to pick the best car loan offer. You will also be able to design your car Loan EMI by making use of Car Loan EMI Calculator. Even while signing your loan agreement you need to learn to read in between the lines, know your loan agreement and then sign the loan agreement.
You must ensure that you put in a fair deal of your research to get the best possible car loan and avoid the 5 most common car loan mistake that people make.Main Category: Loans