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Want a car loan? Here are some tips.

The emerging market of auto sector has created a huge market for car loans. In fact it is estimated that auto loans form one third of the total loan banking in the country. Part of this is because of easy accessibility of car loans by most banks including public sector banks. Buying a car is still one of the cherished dreams of most Indians. To top it all Maruti Suzuki and Hyundai Motors and Tata Motors are making significant efforts to move to smaller cities. In fact, Maruti has plans to spread the network of its dealerships from 600 to a few thousands in the next four years.

Gone are the days when you had to book a car in advance. You can now actually go to the showroom, pay a small amount of cash towards cost of car. The rest will be borne by the bank which provides you a loan. Even used cars get easy finances now-a-days. But what one must remember is that most of the car buyers in India are first time buyer. They will require some general tips before applying for a loan.

Following tips could help you get a better deal with lower EMI’s.

Banks give additional services

Check if bank is giving you loans at on road prices. This will include registration charges, insurance, road tax and other overhead cost apart from the basic cost of car (ex-showroom). If you take a car loan on ex-showroom price of car you will have to pay the other costs yourself. This amount could become a substantial burden on your purse.

Take loan of a lesser amount

The first principle is that take as little loan as possible. With this you will pay lesser EMI’s and will also pay lesser interest rates. Of course arranging for cash is a huge task which will require meticulous planning. But if done properly, this will serve to be a better deal than taking huge loans. Remember that banks charge interest on every rupee you borrow.

Research and find lowest EMI

Banks offer loan with competitive interest rates, it is always better to do a thorough research on the interest rates offered by banks and the related services they offer. You may just find that banks are offering special schemes with low interest rates or has cut interest rates by few basis points. Choose the one which suit your mode of re-payment. Check if the banks agree to waive off processing fees.

Interest is lower on popular models

Banks provide easy loans and lower interest rates on popular models. Even in the used car market, popular models like Hyundai Santro, Maruti Suzuki Alto, and WagonR command higher prices than the rest. Their resale value is assured to remain high for some more years and servicing is easy. Hence they attract cheaper interest rates. Generally the interest rates for older cars are very high.

Double check loan agent credentials

Some people can take you for a ride by posing as agents of big lending institutions. Do not sign on any document or pay money to people without checking their credentials. These offers are usually sugar coated and made to look sweeter than usual. Exercise caution in such cases.

Research helps you get a good deal. The more facts you know, the more better it is. Today with internet a lot of information is available online. It also requires lesser time than going physically to each institutions and checking their loan details.

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