Buying a car is always exciting, irrespective of the number of the cars bought in past and the queries pertaining to the features of car are also equally exciting. Along with understanding the elements, performance and highlights of the model, you must ask the following questions in case the car is being bought under finance from a lending institution.
Interest rate being charged to you
Car loan interest rate is the obvious question that you would ask. But what you need to understand is the APR (annual percentage rate). APR is the best way to know the actual interest that you would be paying on your loan. APR is the actual interest rate that gets levied on the balance principal amount since it includes all charges apart from the base interest rate and the right way to calculate the interest.
Down payment that you need to make
Majority of cars for personal use get financed up to 90% of the value. However, the possibility of 100% finance for specific models of a make cannot be ruled out. So do check out on this. The margin money being paid by you could also get impacted by your credit score. In case of a low credit score, the lender may ask you to foot a larger down payment. Such measures are taken by the banks to reduce the risk associated with a particular loan.
It is important to have clarity on other fee or charges if any that may get charged on your loan before you sign on the dotted line. You also need to have an understanding of the late payment charges, bounce charges, penal interest etc. While you may not intend to delay the payment but unforeseen circumstances can result into a bounced EMI.
Documents that you are required to furnish
You need to get the list of documents that the bank would need from you to be able to process your loan. While a few documents like your Adhaar Card, Pan Card may be available, others like a bank statement, income documents may not be readily available and you would require a day or two to arrange them. Also, the period for bank statement would be an important aspect for you to confirm.
Date of EMI
The date on which the EMI would get processed will play a critical role. While a few banks may have the flexibility to assign a date of choice as requested by the borrower, the others may have fixed dates of the month to process the EMI. Depending upon your salary day or the day when you feel that you would be able to manage adequate balances in the account to serve the EMI, the date of repayment should be fixed. In the event of delayed payment of the installments, your credit score can get adversely impacted and leave you gasping for loans for bad credit.
Post disbursal service
You also need to understand the post disbursal service standards. Since the possibility of turning to customer service cannot be ruled out over the term of the loan that can range up to 60 months and even beyond in some specific loan agreements, the ease of access to service and turnaround time on the service request can play an important role.
Loan process time
The time taken by the lending institution to process the loan is also important. Since this would directly impact the delivery of the car it becomes important for you to ask this question. No car dealer would release the car till the time the loan gets processed completely and the amount disbursed.
This is again an important aspect. You may want to pre-close the loan through a windfall gain and realize that there are hefty charges for you to be able to actually do so. Thus it becomes important to seek clarity right in the beginning so as it does not come as a shock. There may also be banks willing to waive off such charges. So do take it in writing from them to avoid any future issue.
So go ahead and buy your dream car but only post getting clarity on the facets that would impact your loan.