5 Tips for Your Next Auto Loan

Buying a car is decidedly on everyone′s bucket list. Before you buy a car you explore the different makes and models of various car brands available in the market. You might speak with family and friends, seek their reviews, even take a test drive or two and then cut down your list of car options to the one that you believe suits you the best.
With car loans it has become simpler to own a car. Car loans are one of the easiest type of, no hassle loans. Car dealers help you connect with a bank officer who would get all formalities done for you at the dealer′s office itself and you could walk out with your car the same day.
So, just because it is easy to get a car loan these days, should you grab the first deal in sight? No. Here are a few tips to make a note of before you apply for an auto loan.
Compare loan rates and terms: You must show the same diligence when taking an auto loan that you showed when you purchased your car. Just as you would do for a car, shop around for best interest rates for a car loan. Compare the terms offered by different bank such as rate of interest, tenure, processing fees, etc.
By comparing car loan interest rate & other terms of agreement you can be certain of making a wise choice. For example, you just sign the papers with the first banker you bump into. There could be other lenders who are offering lower rate, lower processing fee, etc. But just because you skipped comparing their terms you missed out on an opportunity to save money.
Plan your budget: Often people stretch their pockets since loans are easily available. They are tempted to buy a car costlier than what they can afford to maintain. This puts more pressure on their monthly budget and sometimes it becomes difficult to repay the loan in time. Stick to your budget that is drafted on realistic figures of your affordability.
Another important factor to consider is if you are giving a trade-in? Incase you have an old car that you would wish to trade-in then first check for its fair market value. Negotiate a good bargain with the dealer to take your car at a fair price and subsequently lower his offer price for the new car. This will help lower your ask for loan as your ultimate cost of vehicle would be lower.
Would someone co-sign your loan: If your spouse or parent would co-sign your loan it would help improve your chances to getting the loan. Their income and CIBIL score will give weight to your application. At times, if the co-signor has a good score then it places the borrowers in a stronger position to negotiate a lower rate of interest, waiver of processing fee, etc.
Review your credit report in advance: To avoid all kinds of shocks related to credit score and report it is advisable that you must review your report at least once before you apply for a loan. It is no more a secret that lenders check your CIBIL report before they approve any loan. If you have an enviable score then you can be assured that you will not only get an auto loan but you can also bargain for better terms. But if your score is deplorable then postpone your plans of buying the car just yet. Rather focus on how to improve credit score and work on it till you have improved your chances of being approved for a car loan.
Try to keep a shorter tenure: Car is a depreciating asset. You don′t want to be paying long for an asset that is actually losing value over time. With a wider tenure, EMI would be lower. A low EMI doesn′t mean it′s the best deal. EMI is a function of three important factors ? amount, tenure and interest rate.
Instead of looking at the EMI you would be paying, pay attention to the rate of interest you are being charged and the tenure of the loan. Ask for a shorter tenure. This will increase your EMI for sure but you will end up paying less in interest eventually and get rid of the debt faster.
Whether you are out looking for a loan or a car, settle for nothing short of best. Explore financing options, draft a realistic budget, get someone to co-borrow, self examine your credit report and consider all aspects of the loan. These are some vital tips for you before you take the next car loan.