Wishing to buy a car this festival? Keep these factors about car loans in your mind

Festivals! The colorful and joyful part of our life. All of us wait for such moments; not only for family gathering but also for some festive deals. Most of us wait for such events to take some expensive decisions like buying Home or New Car etc. In these festive days Dealers as well as lenders provides exciting offers with many money saving deals. Bank and NBFCs usually decrease their Interest rates, Processing Fee and other costs.

Factors to be consider before get a Car loan

We all do proper research about car loan financing companies and their interest rates. Interest rates is not only a factor to be consider for a car financing scheme; keep these factors in your mind about car loans before going to finance a car on these festivals:

• Never Finance through the dealer

• Interest rates on Car loan

• Processing fees

• Documentation charges

• Part prepayment charges

• Selection of Loan Tenure

Never Finance car loan through the dealer:

Get finance from the dealers is a convenient option and we often choose this option in hurry. Most of the dealers have their tie-up with different lenders. Think twice before choosing this option. It’s not easy for a dealer to be tied up with all banks, so do some extra research and compare the interest rates and other financial charges. Never take any financial decision in hurry.

Interest rates on Car loan:

Interest rate is one of the most important factors to check before applying for a car loan or any other financial product. Bank and NBFCs offers two types of Interest rates:

• Fixed or floating interest rate

• Flat or reducing interest rate

Fixed or floating interest rate: Fixed interest rate refers to the certainty in the interest rates whether Floating Interest rates are expected to down in feature. Many lenders offer Interest rates as per the borrowers CIBIL score.

Flat or reducing interest rate: In the flat Interest rate, the interest rate is calculated on the full loan amount for the entire tenure whether in reducing Interest rates the interest is charged only on the outstanding principal amount.

Processing fees:

Some of the lenders offers car loan without any processing fee. Most of the Bank and NBFCs charges 0.5 to 1.5%* of loan amount as processing fee. Keep proper comparison about interest rates and processing fee before going to apply for car loan.

Documentation charges:

As an additional charges lenders asks their borrower to pay Rs. 300 to Rs. 600 as documentation charges as per the applied loan amount.

Foreclosure or Part prepayment charges:

This one is an important factor to be considering while applying for car loan. Most of the Bank and NBFCs asks for the prepayment penalty or foreclosure fee. Many lenders charges 5% of loan amount and taxes as the prepayment or foreclosure charges.

In festive season most of the Banks and NBFCs waive Prepayment or Foreclosure charges and processing fee as well. Many lenders are put some condition for the prepayment or foreclosure of the loan amount. So be careful before going to apply for car loan in India.

Selection of Loan Tenure:

A loan tenure is period in which borrower needs to repay the loan amount. We often choose a loan tenure which comes with the less EMI. It gives relief to us for that time but indirectly cuts huge amount from our pocket. In normal terms a car loan comes with repayment period of 12 to 84 months. So keep it in mind that longer tenure comes with less EMI but cuts higher are the total interest outgo.

Never take financial decisions in hurry, take your time and choose right option for you. Do the proper research and understand the important factors before applying for a car loan.

This post was first published at https://banknomicsblogs.wordpress.com/2017/09/04/personal-loan-for-travel-loan-to-make-your-trip-tens-free/