A loan is an amount of money provided to you by a reliable bank in order to meet any specific need. In today’s time, there are a number of people who buy cars with the help of a loan. This is beneficial in many ways as:
- You don’t need to fix an enormous amount from your savings into the purchase made by you. For instance, if you put in a large amount of money into a car and post-purchase you feel the need for money for an unseen emergency, you won’t be able to meet the requirement in monetary terms because most of the money is already invested.
- You can easily pay back the amount in instalments, which prevents you from shedding out a large amount all at once. The sole purpose of getting a loan is not paying the whole sum all at once so as to prevent the allocation of all the resources in one place at a particular time.
- If you don’t have adequate money to buy a car by paying the entire amount at once, a loan enables you to meet your desire and allows you to pay back in smaller amounts.
Regardless of how appealing the prospects of getting a loan might seem, there are certain things you still need to consider before applying for a loan.
Make sure that the car loan EMI suits your monthly budget
There are banks which pay on your behalf and provide you the ability to pay in significantly smaller amounts. When taking a loan, you need to make sure that the loan you are applying for has a monthly EMI which meets your budget. If you apply for a loan having an unaffordable EMI will lead to untimely payment or nonpayment which can affect your credit score adversely.
If you take a loan whose EMI you can’t pay every month because it is too big an amount for you, there can be adverse consequences. Such as:
- You will be charged a late fee.
- Your credit score will go down tremendously which might lead to disapproval for the next loan application.
- Dealing with recovery agents can often turn out to be humiliating and stressful.
Try to borrow a smaller amount and make a downpayment for the rest
It is a considerably important fact associated with loans– the more significant the amount, the larger your interest amount is going to be. Companies leave high-interest charges on loans so that this doesn’t become a problem for you, it is suggested that you borrow a smaller amount of money.
This not only allows ease of paying back but also eradicates the risk of the inability of paying on time. However, if you don’t have any amount from the saving, but you need a car urgently, you can turn up to several reputed companies and apply for kiirlaen(fast loan) which has a lower interest rate.
Keep a check on your CIBIL score
Your CIBIL score determines your interest rate associated with your loan amount. A lower CIBIL score can lead to high-interest rates and might often be linked with denial of loan application. It is recommended by the CIBIL website that you need to have at least a score of 750 for smooth acceptance of your loan application. You can buy and have a look at your CIBIL score from the CIBIL website and apply for car loan accordingly.
All in all, taking a loan shouldn’t be a hasty process, you need to check all the prospects, compare the options, and get then go for the best one.