As the Indian middle-class segment
moves towards the modern lifestyle, the demand for four-wheelers has
significantly increased. This has led to the need for car loans has also
increased. The loan is useful for those who do not have enough monetary
resources at their disposal. In such scenarios, the EMI calculator comes handy
to calculate decide on the suitable loan amount and for managing the finances accordingly.
It is a hassle-free tool that assists you in planning your EMIs beforehand. The
device is available on the website of the lender and available free of cost.
Before you make the
calculations and decide to purchase your desired vehicle, there are certain
factors you need to learn and consider.
They are –
EMIs: It is easy to get excited about the prospect of
owning a four-wheeler through instalments. Do think about the affordability of EMIs
before taking the plunge. You may have other EMIs consuming your finances, such
as home loans, education loan, etc. Make sure you can afford the car loan EMI before
applying for one.
Short-term loans: The more debts you have, the more interests you pay. Also,
the longer the tenure, the higher the interest rates. Make a note that the loan
cost is the same irrespective of the loan tenure and amount. It is the interest
rates that increase the loan amount and term. Auto loans usually come for a tenure of one to seven years. If you go for low
amount, you need to make a hefty down payment. Besides, shorter duration also
means higher EMIs.
Credit score: Before applying for the loan, check your CIBIL score.
A poor score could either lead to rejection or higher interest rates. Most of
the loan application gets approved with a score anywhere between 700-900. CIBIL
rating check is a part of process of every lender. Many times, poor score is
owing to poor credit history. This you need to rectify before approaching the
lender.
Processing fees: This one aspect that you can negotiate with the
lender. Depending on the loan amount, the processing fees vary. These may be
small amount, but it adds to your overall loan value. You may get lucky if you
get hold of the car loans during the festive season as banks waive off the
processing charges. Do wait for such offers.
Prepayment
charges: Four-wheelers are
depreciating assets. The older the vehicle gets, the lower its value. Loans for
depreciating assets should be cleared off immediately. Even if it means
prepaying the mortgage. You can always check the EMIs for prepayment by adding
the balance amount in the car loan EMI calculator. The investment is usually fixed-rate loan and lenders
can charge you fore prepaying fixed-rate credit. Hence, check the possibilities
on the EMI calculator and then make a wise decision.
