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Top 3 Things to Consider Before Applying for a Car Loan

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Car loans are one of the most sought loans by a lot of people to have a dream of having and driving their own car, but many of the people who have this dream are having a misconception that it is hard to afford to make that dream come true. This is post is all about making it clear for the audience to know about the procedures and the types that are available for them. At this point in time, only car loans have come into existence for those who are able to pay some amount of money of its costs by every month in the installation, EMI.

But on the other hand, one should need to consider some of the factors that are applicable before applying for a car loan, they are as follows.

  1. Comparing Each Type of Loan Lender

The interest rates of the car loans are not even or same with all of the loan lenders, they are different from each other and it depends on the factors of these categories, they are the model of the car, the capacity of the repayment, employer of the car and many other such factors.

As many of the banks that offer special car loans would have different rates of interests according to their current customers, the loan applier should be in mind to check each of the current bank that offers such loan facilities, in order to do this the person needs to visit the online loan lending marketplaces to compare each of the loans along with the interest rates that are offered by the other banks and the other lenders. Along with this, the loan applier should also be in mind of making sure about the rates that are offered by the dealer that finances those companies or simply to captive the car finance companies before taking the final decision for applying for the loan. These things need to be checked before applying for car loans in the banks as a matter of making sure of what you get.

  1. Checking the Affordability of the EMIs

Apart from the rates of the interests, the EMI of the car loans basically depends on the other two factors, that is, the tenure of the loan amount and the loan amount itself. One should try checking the affordability of the EMI and also the monthly expenses according to the standards by deducting it, current EMIs, the premiums of the insurances that need to be paid to the insurance company along with the monthly income. Before all these the lenders would prefer the total EMIs that need to be paid and also the business name registration, apart from these including the car loan EMI that is the 40 percent of the net income per month. While a higher EMI will indeed lead to a lower cost of interest but definitely not at the cost of the investments or the cost of the emergency funds.

  1. Shorter Loan Tenure

Many of the lenders offering car loan tenures to their customers up to seven years, which is a better option for a shorter tenure as it will sure reduce the cost of the interests. But, as shown, the shorter tenure would be leading to higher EMIs, as the period the EMI is short the money paid on the EMI would automatically increase, which is directionally proportional to the money that is paid for the EMI. To make life easier, the installment amount of money that needs to be paid shorter. This is the overall liquidity and the contribution that is imposed on the goals of the EMIs.

Many of lenders that finance up to 100 percent of the cost of the vehicles’, but it is better to opt for the lower amount of the interest in order to reduce the cost of the interest. While going for this option, it is a better idea for not using the emergency fund or redeeming the investments that are used for long-term as the adversely might impact a person’s financial health in the near or the far future. There are numerous ways where one can examine before applying for a car loan but these are pretty good enough to cover most of the aspects.

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