For most people owning a car is a symbol of success. The novelty of going on a long drive or a road trip with their friends and family is an emotional goal. Also, commuting to work and driving around the city in your own car makes
it totally worthwhile.
Today, irrespective of whether you are salaried or self-employed, it is easier to own a car of your own choice by availing a car loan.
Now with a simplified loan process many banks offer, most individuals have access to funds required to buy a car. Besides this, the other benefits of a car loan are:
- Investments assigned for other important financial goals are not disturbed
- You do not exhaust all your finances.
- You don’t need to mortgage your existing assets to fulfil your dream, as the car loan is a secured loan: the bank hypothecates your car until you have repaid the loan in full.
- You repay in parts – initially, you just pay the down payment and thereafter, Equated Monthly Installments (EMI).
- If you are self-employed and intend to purchase the car in the company’s name, you also receive a depreciation benefit.
- Lastly, with a car loan, you can gain quick access to drive your dream car.
This being said, before you opt for a car loan take into consideration these five important points listed below:
- Compare car loan rates
- You could research about this online and/or offline (by talking to various banks) to understand the best deal available. A lower interest rate on your car loan can enable you to save on the interest outgo over the loan tenure.
- This saving will even reduce your (EMI) on the car loan and the total cost of the car loan. This will help you zero in on competitive interest rate and strike the best deal.
- Maintain a healthy credit score
- A credit score of 750 and above is better because it reflects your credit behaviour and creditworthiness. The bank will conduct a thorough background check and source your credit report from various credit information bureaus
to assess your credit score, which gives you an additional leverage to get the best deal on a car loan.
- Avoid building a mountain of debt
- Although you may dream of owning a Ferrari, settle for a car on a loan that suits your pocket and needs. Avoid creating a mountain of debt and borrow within your means. This way you ensure that the repayment outgo does not
become a burden.
- To know how much the (EMI) on your car loan will add up to, use Axis bank’s car loan EMI calculator; it is a great tool. All you
have to do is enter the loan amount, interest rate, tenure, and processing fee and it will show the EMI and the total interest that you will pay during the loan tenure.
- Keep an eye out for discounts and deals
- Sometimes certain offers are too good to miss, particularly during festive seasons. Perhaps that’s the time to get the best deal; because apart from the best interest rate on your car loan, you get benefits such as, various
other discounts, loyalty bonus, exchange bonus, and valuable car accessories from car showrooms. So be on a lookout for who is offering the best deal during the festive season.
- Sometimes when car sales drop, car showroom/dealers offer deals and discounts to roll out their inventory. This could work in your favour to get a reduced rate of interest on a car loan.
- Do read the fine print
- Many a times, there’s more to it than what meets the eye. Hence, reading the fine print before zeroing-in on any lender may shed light on the hidden costs; loan-to-value ratio, down payment, prepayment charges, and other
charges. Always closely examine these aspects as it will help you take the right decisions.
- Applying for a car loan online is the best option as you can do it comfortably from any place that has an internet connection. All you have to do is input your name, e-mail id, mobile number, state, city, captcha code, and
accept the disclaimer policy before you click on the ‘Submit’ button.
- Soon you will receive a call from an Axis Bank representative who will explain the details of your car loan.
- While applying for a car loan, fill-in a duly signed application form, and submit it with the following documents which the bank will scrutinise before it decides to disburse the loan amount:
- Age proof
- Address proof
- Photo identification proof
- Income proof (salary slip, Form 16, a certified copy of financial statements)
- Latest Income Tax Returns
- Bank statement
- Signature verification proof
- Duly signed loan agreement
- Pro-forma Invoice or Rate List
Ensure you make an informed choice for a smooth drive and hassle-free experience until you defray the loan.
Wish you happy and safe driving!
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.