Things You Need to Know About Car Loans

Planning to buy the car of your dreams but not sure where to start? Or are the numerous advertisements that are often times "too good to be true" confusing you? How do you tell which is fact and which is fiction? Well, before you get into signing for a car loan, read the guide below. It'll provide you with some things to think about before finalizing your decision.

First off, you should assess just how much you can afford. There are financiers offer schemes that give 100% car financing but the catch is that they will take advance EMI's or some sort of deposit from you. So you don't really get what you've been promised. It doesn't take a rocket scientist to understand that you will still have to shell out some cash and thus making their claim of 100% financing nothing but a hook and you pretty much fell for it and as the saying goes, hook, line and sinker.

Next tip. Don't jump into a car loan just because interest rates are low. A great way to judge a loan is through its interest rate. If it's too low think twice before getting into it. An interest that's just right is one that takes all the costs such as processing fees and calculating it into an affordable rate. Be wary, as well, of interest rates that are too high as this might lead you into debt.

Find out if the bank, if you opt to go to a bank, has a step up option. This is suitable for people who aren't able to shell out huge sums as monthly payments during the first few periods of the loan. This is a great option but expect to pay higher sums when you get a promotion or a salary hike.

Many people tend to forget this but the next step is vital. Read the fine print. Learn about the details of the entire loan. Read the agreement several times and ask questions if there's something you don't understand. If you understand fully and well what you're entering, this could help prevent you from running into problems in the future.

You should also learn about the pre-payment charges that come with your loan which are applicable during the payment of the loan before its schedule. Knowing this would be useful if you want pay ahead of time some of the loan as and/or when one gets the money. Your outstanding amount would be reduced after you make such payments. These could also be helpful info when you're deciding during tie-breakers.

Keep a look out for bargains and discounts. Remember that it's okay to negotiate the final interest rate or EMI that you need to pay. Also, shop around for loans with a longer duration. Car financing are usually available from 1 to 5 years but there are banks and some agencies that can go for 7. So hunt them down.

Bottom line here is, don't rush into anything. Read, research and ask around. Don't sign anything that you don't understand. If you rush into a car loan deal just because the interest rates are so tempting, you just might end up in debt. So think twice and think hard when choosing a loan suited for you.