Financial freedom is an essential component of human life. Without financial freedom, you won’t be happy. You won’t accomplish your goals. That’s why you need to take extra caution about your financial life. For example, you need to take loans that you can afford. However, that doesn’t mean that you forgo taking loans. It means that you need to be extra careful. For instance, if you are taking a car loan, it’s important to evaluate your needs. Take a loan that you can repay. Look at your income. The following questions will guide you in taking a car loan that you can be proud of.
What is the Interest Rate?
Before applying or a car loan, the first thing you should consider is the interest rate that the creditor would charge on your loan. Borrowers who have an existing relationship with a bank often get loans at relatively lower interest rates. Certain banks charge an interest rate of less than 9.5% per annum.
How Much Will You Get?
It’s always advisable to pay about 20 percent of your car price on your own and then get the remaining amount financed by the bank. Nonetheless, many banks offer loans of up to a hundred percent of the ex-showroom price of the car. So, applicants should always try to follow the 20 percent rule under which they shouldn’t take out a loan that would deduct more than twenty percent of their monthly income in EMIs. Remember, paying a higher EMI every month can severely strain your finances.
How Much Should You Pay As Down payment?
It’s important to understand that your car loan could stay with you for some time and you’ll have to pay a consistent amount in EMI every month for a couple of years. That’s why smart financial planning is critical here. Paying a greater amount of EMI can put immense financial pressure on your daily budget so as to keep the tenure on the lower side. You should also refrain from choosing the longest tenure since it will increase the interest payable on your loan amount. A reasonable EMI with a sensible tenure is what you should be looking for.
What Are the Applicable Fees?
Aside from the interest amount, you might be required to pay a number of charges plus fees on your car loan. So, be keen to ask about all the charges and fees applicable on the loan at the time of sanctioning and while paying off the debt. Additional charges might include the loan processing fee, credit report charges, amortization schedule charges, documentation charges, registration certificate collection fees, foreclosure charges, credit report charges, loan cancellation charges, bounce charges, late payment charges, and swap charges.
The Bottom-Line
Having a car is a dream for many. It makes life comfortable. However, it’s important to get the right car financing for better financial freedom. Don’t take a loan that can lead to car repossessions a few months down the line. You need a car loan that’s within your limits. The above questions have been prepared by experts. They are meant to guide you in choosing a car loan that best suits your needs. Get your loan from instabank – lån and purchase your dream car.
