The holiday season is when people often buy personal vehicles, and that’s why you see banks creating attractive vehicle loan deals to help people complete their purchases. There is a flurry of such offers now. If you are looking to take out a car loan now, here are some things to get started.
Check with your own bank
Often the easiest way to get a loan is to leverage the relationship with your bank. Your bank would have created a pre-approved offer based on your income and credit profile. You can enjoy it with minimal paperwork via netbanking, banking app, branch or aggregator. Since your bank is aware of your cash flow through your savings account, you may be spared from filling out forms. You can then put your car dealership in touch with your bank to quickly complete the purchase.
Consult the festive offers
Several major lenders have created festival offerings with features such as waivers or discounts on processing fees or time-limited interest rate concessions. A large government bank offers a combined offer for home and auto loans. You can check and compare these offers online. Offers are generally conditional. For example, you may need to have a payday account with the lender. Read the fine print of the offer to understand your loan eligibility.
Leverage your current loan
Current loans provide new credit at low interest rates. Most major lenders offer you a home loan supplement, which basically involves borrowing an existing loan. Supplements are granted to borrowers with a minimum repayment history, for example 12 months since the start of the loan. Home loan supplements are slightly more expensive than home loans, but can be the same or less expensive than a car loan or personal loan. For example, a large public bank’s lowest mortgage rate is 6.70, but its lowest auto loan rate is 7.25, which is the same as its loan supplement rate. lowest real estate. Therefore, depending on your own eligibility, it may be cheaper and easier to get a top-up, which can be used for any purpose, including purchasing a vehicle.
Check your credit score
Before applying for a car loan or any other loan, be aware of your credit score which only develops if you have taken out a loan or a credit card in the past. Today, the lowest loan rates are reserved for those with excellent credit scores, which usually means a score of 750 or higher. If you are below that mark, you will pay a higher rate. Therefore, know immediately what your score is and avoid any rude shock after applying for the loan. If your score is low, you may want to spend a few months improving it, so that you can qualify for low cost loans.
Pay off small debts
Your EMI car loan starts immediately. If you have any outstanding dues such as credit card dues or a few personal loan IMEs left, you might want to clear them. This will achieve two things. First, the lender will be more confident in your repayment capacity since you don’t have any other contributions weighing on your finances. Second, after you settle your small loans, your credit score should improve as well, which will help you get good loan deals. The second point is important for those who were below 750. If you were already comfortably above 750 despite the contributions, you don’t have to worry about it.
Prepare the deposit
If you are new to banking, your lender will need to see proof of income, identity, and address. Finally, prepare your down payment. A few lenders will offer you 100% road financing within certain limits. Many will fund up to 80-90%. If you buy a used car, the financing will be less. Therefore, make sure you have the margin money as well as an early IME before applying for the loan.
The author is CEO, BankBazaar.com