Things To Know Before Applying For A Car Loan

Things consider before applying for a Car loan

Last Updated on February 10, 2023 by admin

If you are considering of owning a car at easy without exhausting your life savings, Car loan was designed to solve the challenge you may face, owning a car is no longer a luxurious product but necessity and convenience which could be seen as biggest investments you’ll make.

But you need to consider pay a fraction of the total cost as the down-payment amount, while the rest of the cost can be financed through loans at affordable interest rates and pay back over time.

Though, there are others factor that influences the EMI amount such as payment plan, tenure, model, insurance, taxes, price, resale value, customization, features, and servicing also impacts the EMI.

Read: What to Avoid During Home Mortgage Loan Process

Getting the best car loan, you need to shop around to choose the best overall car loan terms of your choice using the most affordable car loan.

Below are vital issue you must consider before you signed your Car loan

1. Check your credit score report :

Vast majority of car lenders will always check for your creditworthiness during pre-approved process. Borrowers with a credit score over 750 have better chances of getting an auto loan approval at easy and you will be charge lower interest rates for having higher credit scores.

2. Compare interest rates across all lenders

Go with lender that offer preferential interest rates that correspond with your  income, credit score and car loans offered by dealer finance companies.

Read: 6 Different Types of Mortgage Loans you need to understand

3. Finalize your budget:

Decide the amount you can allocate for  your dream car and other expenses such maintenance, fuel cost, insurance premiums, etc which correspond with your monthly amount that you are willing to spend.

4. Choose your Car specifications:

Decide on what car model you need to buy that fits your budget.

5. Get pre-approved

Once you have decided which lender to go with, go ahead and seek pre-approval. This offer the guarantees that you have a loan to cover the cost of the car you want.It’s great because the lender will hand you a pre-approval letter that you can use as a bargaining chip at the dealership

6. Calculate the resale value of the car

You need to consider colors that reflect their popularity in the market, supply and demand which normally determine how much your car is actually worth at the time you want to sell it.

You should go for a model which has ample service centers nearby along with the availability of spare parts.

Read: What to consider before applying for a home Mortgage loan

7. Plan your finances by Negotiate the prices and terms:

Don’t decide in haste, try and look into their financing options and Compare the prices of your favorite cars before you reach the store to make a wiser decision.

Make sure you read the agreement carefully before signing it because some dealers hidden costs such as taxes, dealership charges, delivery costs, car preparation etc.

8. Check processing fee and pre-payment charges:

Make sure that you are not being charged higher interest rate or any additional charges to make up for the concession or waiver of the processing fee. choose the one that imposes least restrictions and charges the least on making prepayments when selecting your lender

Read: What is different between Secured loans vs Unsecured loans

Meet Ogbeide Frank, popularly known as perere, a blogger who loves writing about finance and Tech. He studied Business administration at the Ambrose Alli University Ekpoma and Mobile Communication at Orange College Malaysia .Frank have worked as a banker and consultant in variety of Nigeria agencies

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