Are you thinking about buying your dream car, but don’t know how to apply for or choose from the various car finance schemes offered by different finance and lending institutions like banks, car dealers, etc?
Five Tips to get the best Car Loan
- Check your credit score.
- Make a budget.
- Compare to choose the best deal.
- Fixed and Variable Rate Loans.
- Choose a short tenure.
1. Check Your Credit Score
Before applying for car finance, get your credit report and make sure you have a good credit score. The interest rates of the loan depend on the credit report if your credit score is low then no lender will easily approve your loan or may charge high-interest rates. You can get your credit report for free from various websites like getting creditscore.com, equifax.com, creditsavvy.com, etc.
2. Make a Budget
Making a budget of how much you can afford to pay as your car’s monthly installment is an essential part of the process. You need to figure out the right amount that does not disrupt your monthly budgets like savings and other monthly expenses.
You can also use auto car loan calculators to get an idea of how much the loan amount will cost you each month.
3. Compare to Choose the Best Deal
While shopping for anything, it’s always a good idea to compare to get the best of the deals.
Similarly, when you are shopping for a car loan, comparing among various car finance schemes offered in the market will save you time and give you an idea of what kind of deals are available and which one suits you the best.
Car dealerships try to allure customers by providing the lowest interest rate but then increase the upfront price of the vehicle, try not to fall in that trap. Financial institutions, like banks and credit unions, are the best place to start.
4. Fixed and Variable Rate Loans
There are two types of interest rates offered on car finance, fixed and variable. The fixed interest rate as the name suggests will remain locked for the whole term of the loan, and it also gives you an idea of how much you have to pay each month. Variable-rate loans may as the interest rates fluctuate depending upon various factors like inflation, government policies, etc.
5. Choose Short Tenure
Choosing the right tenure length for your car loan is also a significant part of the process. Most banks offer loans for the highest period of 7 years. Applying for a longer repayment term can reduce the amount of your monthly installment of the loan. However, for longer tenure banks will charge a massive interest rate, which will add to the cost of the loan. You can also reduce the EMI amount in short tenure loans by increasing the amount of the down payment, and by doing this, you can also bargain to reduce the interest rates.
Your dream car is just a visit away to the best car finance provider. However, you can go with the other ways to get the best car finance by asking neighbors and relatives for recommendations or searching it on the web. But, before finalizing a deal you need to make sure that you follow the steps mentioned above. We want your experience to be the best and we hope that you acquire the best car finance deal and the most wonderful car.