All You Need to Know About Car Loans

Getting a new car loan is not easy though it can be the easiest way to attain your dream car. There are many players in the car finance industry and for the consumer choosing the best type of loan is a difficult task. Many factors have to be considered before taking up a car loan.

Some of the major factors to be taken into consideration are as follows:

Whether you want to take up a loan or not, will depend upon the car you want to buy. Since the rates of interest on different cars vary so the type of loan that you need will depend on the car you want.

It also depends upon the funds that are available with the consumer. If you, the consumer pays a large amount of loan as advance then the monthly installments that follow will be considerably low. Thus choosing an auto loan depends upon the amount of disposable income with you.

For any car, find out the finance offer with the lowest equated monthly installments (EMI). Car loan financers give loans of up to 85% of the cost of the car, so check your budget first and decide on how much you can pay and how much needs financing.

The loans are generally given for a period of 3 years and may extend to a maximum of 5 years. The interest rates on such loans also depend from financer to financer. It also varies from car to car and the relationship shared between the loan provider and the car manufacturers. Generally, new car loans have lesser interest rates than those for old cars.

The effective rates of the loans on offer have to be calculated by taking into account interest rates as well as loan term. This will help in comparing the different schemes on offer and enable you to choose the one that best fits your needs.

The total cost of the new car loan does not include only the interest payable but also extra charges such as processing, transaction fees, documentation fees or any other fees. So one has to confirm with the financer as to the other charges that accompanies an auto loan.

A number of documents need to be submitted before applying for a loan such as previous year's tax returns, birth certificate, age proof etc. Today however banks are trying to make things easier and faster for the consumer by requiring fewer numbers of documents. Moreover, processing loans have also been made faster through the online systems.

Sometimes the financer also offers discounts on new car loans. One has to be careful about the fact that sometimes this is done against higher interest rates on the loans. In the end, therefore it would be more profitable to choose schemes that give low interest rates than those that offer discounts.