It doesn’t matter if it’s your first car or the fifth one; buying a new car is always exciting. However, when you’re eager and all set to purchase a new vehicle, there are some common mistakes that you should avoid. It is even more critical if you are getting a car loan. There is an overload of options, and you should ideally choose the most beneficial plan for you. Let’s take a closer look and find out some of the mistakes you should avoid when applying for a car loan.
- Lack of research
Buying a new ride is exciting, but that shouldn’t make you jump into decisions that you may regret later, especially when you finance it through a loan. Ensure you research the finance options and the car itself thoroughly.
Lenders could have several loan options for different car brands. In addition, both the car companies and lenders could also run promotional offers, which could benefit you. Your research will ensure you don’t miss out on anything beneficial, and you end up taking the best loan offer you could get.
- Taking a loan that you can’t afford
A car is often a milestone purchase, and it’s not always the cheapest. Hence, ensure you can afford a car loan before applying for one. Ideally, you should be able to comfortably pay back your loan with your income and still have money left for your daily expenses. You could take the help of a car loan EMI calculator tool to figure this out.
Enter the loan amount, the car loan interest rate, and the tenure, and the tool will display the monthly EMI amount you will have to pay. You can then compare the same with your income and see if it’s affordable.
- Applying for a loan with an unhealthy credit score
A credit score represents your credit behaviour. Lenders analyse your credit score when they consider your loan application. Therefore, a lower credit score increases the chances of your loan application getting rejected.
Furthermore, if the application is not rejected, you might be offered a higher interest rate because a low credit score represents a risk of non-repayment. The lender will need to compensate the same with a higher interest rate. Hence, it’s advisable to fix your credit score before applying for a loan.
- Not reading the fine print
Most terms and conditions texts are dull, and it’s understandable you agree without reading them. But when you are applying for a car loan, you must bite the bullet and read the entire fine print. It can save you from hidden charges and terms that might cost you. You will also get a better idea about the pros and cons of taking a car loan, which can help you analyse your decision better.
Buying a car is like buying a home; it’s a huge milestone, and there are a lot of emotions involved. Once you know you can avoid the above mistakes, waste no time bringing your dream car home.