Auto loans, just like its mechanical namesake, comprises of plenty of complications and multiple parts. However, as compared to the loan, there are plenty of individuals who have a better understanding over maintaining a car than a loan.
While there are considerable differences between both aspects, several factors that are common between them one of them includes the perception that both the car and loan are indispensable to their lifestyle. While a large population do own cars, when it comes to financing the purchase, auto loans in India have become the most viable option. But in order to avoid any possible complications or financial drawbacks after applying for the loan. Here are a few factors you can consider when it comes to applying for this loan:
How much to put down?
‘No down payment’ is one factor that you may have come across when applying for a loan. But is it in your best interest? While this may seem like an attractive offer, a down payment will go a long way to saving funds, especially in a loan application. That is because higher the down payment, the lesser of interest you will need to pay. Additionally, since the value of new cars depreciate as soon as you operate them, you will end up owning more than the car’s worth for the time being. In other words, if your car gets stolen or gets into an accident, your insurance may not be able to pay off the complete loan amount.
How much of a term length to opt for?
Loan terms differ based on the type of loan. Auto loans can last anywhere between 10 to 15 years. However, lower the monthly payments, the more you will need to pay, especially regarding interest expenditure. However, since vehicles do have a depreciative value, you may end up with a longer loan that a car, which normally has a shorter useful life. If you do not want the loan to outlive the car, opt for a loan duration that will suit your needs.
How to get the best rate of interest for the auto loans in India?
Loan interest rates vary on different factors and conditions. The best way to get the best interest rates is to compare lenders before settling on a loan offer. You must be aware that loan rates are typically higher on longer loan. Therefore this is another incentive for choosing a loan tenure that is shorter.
Opt for a direct or indirect lender?
There are two ways you can finance the purchase of your vehicle. One way to do so is by getting the loan directly from a financial institution. The other option you can consider is through the car dealer. While it may be convenient to opt for financing from a dealer, you may be on the receiving end of high markups on loan rates. Don’t forget to compare them to loan rates offered by a financial institute before making a decision.