Eyeing the latest car models on the market? However, purchasing a car is a commitment that may exhaust your savings. On the other hand, financing a car is the smart way to own the vehicle of your dreams. Before getting ready to bring home your four-wheeler, you must give some thought to how you are going to finance this huge expense without burning a hole in your pocket.
A Guide to Finance Your Car
Financing a car includes borrowing money from an institution for a fixed period of time. Read on to find some tips on how you can finance your four-wheeler in the most effective way.
- Set a Budget
Before you enter the dealership and fall in love with a particular model, it is good to have a clear picture of your finances and a clear budget that you have set for yourself. After all, what is the use of eyeing a luxury car you can’t afford? This budget should be practical as well as reasonable. There are cars available in different price bands that fit your needs specifically, therefore do a thorough research on all the make & model of cars in your price band. Remember, even if you take a loan to buy the car, you will still have to make monthly payments. Thus, spend wisely instead of splurging and set a clear budget.
- Check your Credit Score
This is a basic step that you must follow every time you are about to make a big purchase or take a loan. Calculating your credit score is a simple process as many bank websites and apps offer this facility for free. Having a good credit score is important for securing a favourable rate of interest. Aim to achieve and maintain a score more than 700. If your credit score is poor, it may hamper your chances of securing financing on your terms.
- Consider a Pre-owned Car
You may shy away from the thought of buying a used car; however, many first-time buyers believe purchasing a pre-owned car is actually smarter than buying a brand new car. In case of pre-owned cars, high end vehicle models will be available at a much lower price. Registration costs and other miscellaneous fees does not exist for pre-owned cars and they have 20% year on year depreciation. Moreover, a used car offers a higher value for the money you pay. In case of a loan, you will have to borrow a lower amount and you can avail a used car loan with attractive rates of interest.
- Make Maximum Down Payment
Finding the loan that is best suited to your present financial condition and fits into your future plans is essential. Some car loans offer attractive interest rates along with flexible repayment tenures. However, the smartest way to take a loan for your car is to pay the maximum down payment so that your loan instalments get smaller and cheaper. Paying 20% of the price of the car is a good start and will help you in the longer run. Moreover, make sure that you compare the interest rates of more than one lender before choosing a loan facility. Also, you can make use of an EMI calculator to get an idea of how much the repayment cost will be in the future.
- Take Extra Costs Into Account
When you buy a car, there are some additional costs associated. These miscellaneous costs can include extended warranties, GST, registration and documentation fees. When financing your purchase, also factor this in to avoid financial constraints later. Before you choose a lender for a car loan, make sure to perform adequate research on terms, benefits, tenures, et al. Do your homework well to make a smart financing decision.
If you are in need of a car loan, IndusInd Bank has some lucrative options for you. The vehicle loans come with attractive interest rates and flexible repayable tenures. Enquire now at IndusInd Bank to know more about car loans.