Are you tired of the bus and train journeys and you want a car for yourself? Do you have enough funds to buy a car yourself? If you do, well and good otherwise you have to opt for a car loan like most other people do.
In order to avail a car loan the first thing that needs to be done is getting a credit check.
You have to check your credit, the moment you decide to get a loan. This score is more of an assurance to your lender about you being able to repay your loan. There are three main credit bureaus from where you can know your credit rating. 1. Trans Union, 2. Equifax, 3. Experian.
Determining how much you can afford.
Whenever you are going in for a loan, it is always advisable to check how much of the loan amount can be borne by you. Generally it is sensible never to exceed more than 20 percent of your take home pay. You also have to deliver about, how much down payment you can make, what would be the EMI and the interest rate on the loan.
You have to take a lot of things into your realm of thought when you are taking up a car loan
1. Depreciation – A car loses its value as it ages and hence it is a depreciating asset
2. Interest rate – The yearly interest fee that is added to your principal loan amount.
3. Insurance premiums – You have to figure out how much your car insurance will cost you, if in case repair cost of a particular car tends to be higher, the insurance premium too would cost higher
4. Fuel – You also have to determine how much gas will your car consume
5. Maintenance – This cost varies, one doesn’t know what kind of maintenance a car might require but the most common ones include, costs of changing tyres, oil so on and so forth.
6. Tax and fees – There are a umber of taxes and fees that are charged on on-road cars for instance for registration of your car with the state, you will be paying sales tax and not to forget the annual property tax as well.
7. Federal tax credits – You also have to do a good research, in the cases of some cars, the government incentives are available.
Below enlisted are some of the questions you need to ask before you apply for a car loan.
1. documentation – What are the documents that I will be required to produce for the loan?
2. How long will it take for processing my car loan?
3. Do you have a set amount that needs to be submitted as down payment?
4. What would be the base interest rate for the car loan
5. How much loan will I end up paying over the course of the loan?
6. What are the fees that are included in the loan?
7. Can I make early payments without penalties?
8. Can you ask me to make full payment of the loan? If yes, why?