First time car buyer - What you should know before applying for a Car Loan


This article is written keeping in mind all those first time car buyers who are looking for buying a new or second hand car and they are not knowledgeable with the car buying process. This article explains the process and some tips for buying a new car.

Buying a new car is always a dream of every person like me, whether you are a student, doing job or running your own business the process of buying a car for the first time will be always uncertainty. For a first time buyer proper planning is very important step to avoid any surprises aftermath. When it comes to buying a new car it requires utmost care and little homework.

An informed decision of buying a new car will never be a regret to you. So the first thing to do is to get an approval for a car loan, this will help you to decide the range of price that you can afford the car. For this you have to invest good amount of time over the internet to find out how much loan will be approved to you based on your eligibility and which car fits into your budget.

As a first time car buyer, I have prepared a list of questions to be asked ourselves so that we will be having clear idea in our mind how much loan should be applied and which car should be bought.

Below are the list of questions that you should consider in your car buying process

  1. Should I go for a new car or for a second hand car?

  2. Whether I am eligible for getting a Car Loan?

  3. Which car I should buy?

  4. What are the problems or hurdles during the car buying process?

Tips to be considered for a First-Time Car Buyer

  1. As a first time car buyer take appropriate informed decision.

  2. Negotiate the car price for which you have set the budget and stick to your budget because it's easy to set a budget but difficult to stick to it.

  3. Use Car loan calculator available on the internet to know what will be your monthly outgoing as an car loan EMI.

  4. Take your mechanic along with you, if you are buying a second hand car, then find out what's wrong with the car so that you can negotiate the price accordingly.

  5. Do not forget to take the test drive of your chosen car because after all you have to drive it and it should be comfortable to you rather only outer look.

  6. Your budget should be set considering the car insurance value as new car will have higher value of insurance than second hand car.

  7. Always try to get car loan first. And do not forget to compare the car loans across various banks so that you can end up having cheaper car loan for your new car.

Following terminologies are also important for a First-Time Car Buyer should know which I came across while applying for car loan.

1. Credit Score - Generally known as a FICO Score. Higher the credit score good credit history and more chances of getting a loan approval.
2. Collateral - If you fail to make the payment on the car loan, the lender has the right to take possession of your car.
3. Interest Amount – The amount that is charged for borrowing the money from the bank.
4. Car Loan Term – This is nothing but your car loan tenure, it generally ranges from 3, 5 or 7 years.

Don't get lured by the lenders attractive offers for car loan just be wise to get the details of your car loan and compare it with other lenders details and select the loan which suits good to you. By doing some self-study as a first time car buyer it will save your money and also help you to build a good credit


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Comments

Author: NK SHARMA16 Oct 2016 Member Level: Gold   Points : 5

Before making a decision of car buying you must do some home work. Today cars are affordable so you must go for a new car. Buying a new car has many advantages such as 4-5 years maintenance free, two years warranty, road side beak-down free help, no risk of case of theft or stolen car and accident/ malpractice involved vehicle. Bank does not provide full car amount loan, you must have 20 % or 1-2 lakh rupees in your hand for down payment. Compare the loan interest rate, go for lowest rate offering from the bank. It is around 10.30 % now. Go for 5 or 7 years term as per your repaying capacity. Take the insurance from a good company which gives cashless service and do not create hurdles in claim processing. HDFC ERGO is good enough as I have had good experience.

Author: K Mohan27 Oct 2016 Member Level: Platinum   Points : 4

What I feel that if you have already availed a loan facility for any product or service in the past, obtaining a car loan would be very easy. For example I have gone for loan for my two wheeler and paying 2500 per month regularly and on seeing my sincere payment, the company volunteered and offered me further loan at any time for any item. That is the credit worthiness I have earned. Now a days a customer need not go to a finance company to fetch a car loan. All the car dealers are having a expressed tie up with various loan providing companies and even the second hand cars are getting handsome loans. So If a car is chosen, getting that to the home is the easiest way to have best financing schemes available to a customer.



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