7 Most Common Car Loan Mistakes to Avoid
Buying a car can be a costly affair. With the pandemic around it is more of a necessity right now. Although purchasing a car can be beneficial in many ways, some people may find it difficult to afford. During such times, car loan can come in handy.
Here are the 7 most common Car Loan mistakes you can avoid to deal with this process seamlessly!
1. Excessive borrowing
Opting for a second-hand car loan is not the endgame. You might also have to spend on car accessories, car insurance and other car-related expenses. Most people tend to fear these expenses and borrow money to keep up with their expenses. However, this is not a wise solution. Instead, one can opt for a Car Loan only after evaluating several financial factors. These factors can help you understand the affordability of a car and investment without breaking the bank. Find out how much you can pay each month and which car fits your budget range most appropriately. You can scout for one accordingly.
2. Not checking your Credit Score
A good Credit Score is important when you opt for a Car Loan. If you end up having a poor Credit Score, there is a high likelihood of your Car Loan application getting rejected. Examine your Credit Score before you opt for a loan. Also, keep in mind that you may have to pay the highest interest rates if you end up taking a loan with a poor Credit Score.
3. Scouting for a longer tenure
Financial institutions provide Car Loans with varying tenures. You must understand that opting for a longer tenure can do you more harm than good. Unless your income is low, don’t opt for a longer tenure. A shorter tenure leads to lower interest rates. Also, since a car’s value keeps depreciating each year, it would be useless to pay more than the car’s actual worth. However, this could be the case if you opt for a longer tenure. So keep that in mind.
4. In-depth research of lenders
Once you calculate the Car Loan interest amount, you will be more ready to meet new lenders and settle for the best offer. Conduct an all-inclusive research and find out which lenders are offering lower interest rates, better facilities and more flexibility on your Car Loan. Always thoroughly analyse the documents that your lender may provide you. Check for charges, costs and any hidden details. We highly recommend opting for a reputed lender like ICICI Bank to be on the safe side.
If you wish to avail a Car Loan of your choice, you can choose one offered by ICICI Bank. With ICICI Bank you can avail top-class facilities like Car Loan EMI Calculator, Car Loan eligibility and even Car Loan documentation for the best experience. You can also opt for Pre-owned Car Loans at your convenience.
5. Financing for add-ons
When you obtain a Car Loan, your provider may try to lure you with a range of add-ons including premium music systems, seat covers and even parking sensors. Although these may seem useful, they can be highly unnecessary. What is more important to know is that these add-ons may level up the car expenses and worsen the situation for you. So, it is best to avoid them until highly necessary.
6. Always approach banks instead of dealers
It is always advantageous to reach out to reputed and trusted banks like ICICI Bank rather than approaching Car Loan dealers. These dealers typically charge a commission/additional fee, which increases the overall cost of the loan. If you want to avail a Car Loan, always opt for a bank instead of dealers.
7. Not evaluating Car Loan processing fee & other charges
Before you apply for a Car Loan with any bank you must assess the processing fee and other charges applied on the loan. ICICI Bank has categorised the processing fees of upcoming car models and it ranges from Rs <2,999> to Rs <4,999>*. Also, there are financial institutions that may give an ROI advantage for miniscule Basis Point. However, the processing fee and other charges may be exorbitant.
Before selecting a bank loan for cars consider several factors and keep these pointers in mind for a pleasant experience.
*This is indicative. Please check with the bank before applying for loan.
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