Do select the right car
Ask yourself the primary purpose of buying a car—daily commute, weekend trips, special occasions etc.
This will help determine which car you need to buy, or at least the category you should consider.
For instance, an SUV may be ideal for family trips, but can be a hassle to park in the city.
Don’t miscalculate what you can afford
A lower downpayment today translates into a higher loan amount and interest costs in the future, and vice versa.
If you already have loans, consider the impact of an additional loan on your finances.
Additionally, make sure that your EMIs across all loans amount to less than half your monthly income.
Do consider your credit score
Take a look at your credit history and CIBIL’s credit score before you apply for a loan.
Try to pay off outstanding dues on credit cards and existing loans.
Use HDFC Bank’s calculator to know if you are eligible for a loan for your chosen car.
Don’t choose the first financing offer
It is highly likely your car dealer may offer you financing. But don’t accept it immediately.
Visit other lenders before selecting the right financier based on their best offer and service quality.
Your bank may offer you a better interest rate if you are a long-standing customer with a good record.
Do read the fine print
Keep the big picture in mind when deciding your lender, and not just interest rates.
For instance, a loan with a lower interest rate may actually cost more due to processing fees and other charges.
Several banks charge substantial penalties on pre-payment. If you plan to close the loan early, this will affect the total cost of the loan.
Don’t underestimate post-purchase expenses
Don’t believe the car salesman when he says car maintenance and servicing is affordable.
Car companies calculate mileage in ideal conditions, not heavy traffic. Hence your fuel costs could be considerably higher than what you planned.
There could be unforeseen expenses such as accidents and your insurance policy may only cover part of it.
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