5 Questions To Ask Yourself Before Getting A Car Loan
Most car buyers rely on a loan to finance their purchase. With the cost of vehicles increasing in recent years, it has become crucial to plan the purchase in advance, and applying for a loan is a step in the right direction. But it is only the first step. There are a number of things to consider before you take the decision. Here are some questions you must ask yourself:
Can you handle the burden of the loan?
You need to consider whether you will be able to repay the loan easily. Can you handle the pressure of EMIs? If you take a loan with a very high interest rate, it can hamper your finances; if you already have other loans to pay, your cash flow might be disrupted. So don’t rush the decision. It is best to clear off pending debts before applying for a new Car Loan. Consider your monthly expenses and be practical about your income before you make a move.
What’s the interest rate offered by the bank?
The interest rate will make a huge difference to the EMIs you pay on the loan. If you have a good credit score, you may be able to negotiate the terms and wangle a lower interest rate. Compare the interest rates offered by various banks before finalising the loan. If you are an established customer, your bank might consider lowering the interest rate a little. A lower interest rate means a lower EMI and hence a lower monthly outflow.
What is the amount of down payment you can make?
Plenty of banks offer Car Loans at 100% of the cost of the car. But you can save a lot more if you opt for a custom Car Loan. HDFC Bank Car Loan with its Step-Up feature will allow you to pay your EMIs at a lower rate, as compared to a standard Car Loan. With this, you can get to pay a lower EMI for a bigger car.
Can you handle the cost of maintaining the new car?
Buying a car is one thing but maintaining it is a regular expense. So you need to consider this before you apply for the loan – are you financially capable of maintaining the car regularly? This includes regular servicing, repairs, and replacement of parts if necessary. The outgo will vary according to the model of the car; you need to calculate this and decide whether the cost of maintenance fits in your budget or not.
Is there a pre-closure penalty?
Pre-closure of the loan means you pay off the loan before the stipulated time period. It should be a reason to celebrate since it means you are debt-free ahead of time. Pre-closure will save you a substantial amount of interest but there might be penalties attached. If the penalty is high, it could dampen your celebration; so enquire about this well in advance. Read the documents properly before signing the deal. Do not get hit with nasty hidden costs.
If the above features of a standard Car Loan is preventing you from owning a car at affordable EMIs, you can opt for HDFC Bank Custom-Fit Car Loan that offers the Step-up EMI scheme for a Car Loan. HDFC Bank Step-up EMI is an ideal solution for your budget as it allows repayment of the Car Loan in affordable EMIs. This helps you realise your future dream of owning a bigger, better car today.
The biggest advantage of this scheme is that it rightly assumes that the income of individuals will grow over time and the car will become more affordable for them in the coming years as their income keeps increasing. With the Step-up EMI, option you can get a higher loan amount with lower EMIs and drive off in the car of your dreams!
So, let Onam be your auspicious reason to take a step closer to your dream car.
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Read more on how to buy a bigger car with a smaller EMI.
* Terms & conditions apply. Car Loan disbursal at sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.