Finance

5 Common Misconceptions About Vehicle Loans

After receiving his first promotion, a 24-year-old man decides to purchase a car. Who doesn’t prefer the luxury of leather seats and air conditioning to sweltering buses and long lines at the ticket counters? Instead of squandering a substantial portion of his savings on a single purchase, he opts for a loan, which he can repay overtime via EMIs. He, like the rest of us, receives a lot of mail and SMS offers for vehicle loans and 0% interest personal loans. But every dealer he goes to promises to have the greatest pricing, which only adds to his perplexity!

The majority of car buyers choose a car loan since it is a short- to a medium-term loan that helps them avoid depleting their funds. This is true even for folks who have a significant amount of disposable income. However, many buyers are told about their financing alternatives on the spur of the moment by the dealer, which adds to the uncertainty. The top 5 top lies about car loans that are distributed by the deals are listed below.

You should go for 0% Interest loans

Many dealers try to entice customers with zero percent financing, but an interest-free vehicle loan isn’t always the hassle-free, cost-effective deal it appears to be. The maximum duration for interest-free loans is frequently less than three years, which is insufficient to provide the borrower with sufficient financial flexibility. To minimize the loan amount, the down payment can also be increased. If the dealer provides 0% interest in auto loans, make sure he doesn’t compensate by raising additional fees.

You should get 100% financing for your car

Many dealerships claim 100% financing, which means the loan will pay the entire cost of your vehicle. This is rarely the case, and if it is, the loan will have a substantially higher interest rate. The bulk of auto loans is available for up to 90% of the car’s invoice value. That means that if you want to buy a car for Rs.10,00,000, you’ll have to pay at least Rs.1,00,000 out of your own cash. Depending on your previous relationship with the lender and other considerations such as your specific credit score. A few financial institutions may also grant 80 percent or 85 percent financing.

Apply for a loan through a car dealership, your application may be rejected cos of your bad credit score

Your auto dealer has little effect on the impact of your credit score. While it is true that having a bad credit score means paying more in interest. Auto-finance loans are rarely turned down because they are secured loans with the automobile as collateral. Before deciding on the terms and conditions of your auto loan (such as interest rate and length). The creditor will consider additional aspects such as your employment history and income level.

To receive the best interest rates, you must apply through a dealer

That is not the case. When you apply through a dealer, all of your talks will take place with the car’s seller. Not with your financing provider. This isn’t always the greatest option, because it’s doubtful that the dealer will shop around for a better bargain. To get the best price, conduct some research and evaluate the many vehicle loan choices available. Read the vehicle loan agreement before signing it.

You cant get a used car loan, So it’s best to buy brand new

If the dealer can make more money by selling a new automobile, that is what he will try to sell. However, used cars that have not been driven in over a year or two may perform just as well as new cars while costing significantly less. Many Indian banks and financial organizations have begun to offer used automobile loans. Just make sure the vehicle’s manufacturing date is within the lender’s pre-determined restrictions.

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