Credit Score, Interest Rate, and Repayment Tenure: Three Key Aspects to Remember When Planning a Car Loan

Owing a car is possibly the dream of every Indian. Right from sports cars to sedans and luxury cars, buying a car of their own is an important milestone for many. However, cars are an expensive asset, and funding their purchase only by your savings can put a huge strain on your finances. Fortunately today you can easily find car loansat affordable interest rates which make it fairly easy for any person to buy a vehicle of their own. Car loans are offered by many reliable lenders across India. As it is an important financial agreement, you must carefully consider your options before applying for a loan and signing its agreement. 

Improving credit scores, choosing the appropriate tenure, and comparing the interest rates are vital for any person planning to take a car loan.  Here are the key tips to follow before taking a car loan:

Maintain a Healthy Credit Score

If you have a low credit score, there is a good chance that your car loan will not be approved by the lender. Hence, you need to take steps like clearing existing debt and paying off credit card bills in full and on time to bring up your credit score. Maintaining a good credit score would show the lenders that you are a creditworthy individual with a sound history of repaying your debts. In certain situation, good credit scores can also help you to get better interest rates on loans.

Compare Car Loan Interest Rates and Tenure

Before choosing any car loan, you need to compare the interest rates charged by different lenders. The rate of interest shall majorly impact the total amount of money that you will need to repay to the lender. Finding the lowest possible rate of interest can significantly help you to save money on the loan. Fortunately today there are car loan EMI calculators available online that make such comparisons simple and hassle-free. With their assistance, you can find the most budget-friendly loan option available. In addition to the interest rates, you also need to keep the loan repayment period in mind when comparing the loan options. Longer loan tenure increases the total interest amount you will have to pay while the shortest possible tenure helps you keep the interest on your loan at the bare minimum but increase your EMI amount. Hence, based on your specific financial constraints, you need to identify the appropriate car loan option.