The car you own today defines your social standing. As much as we may say otherwise, this is an indisputable fact. Earlier, being able to buy the car of your dreams used to be out of reach for most people; but nowadays, there are a number of financial institutions that offer Car Loans which help people change their dreams of owning their favorite car into a reality.
But as it is with every kind of financial contract, Car Loans also come with a number of factors that one must consider before selecting the provider or the Car Loan. Many people concentrate on finding the best deals for cars, so much so that they forget to pay attention to finding the best car loan. Here are some of the most common mistakes people make while choosing a Car Loan:
Selecting Longer Loan Terms
If you spread your loan out over a longer period, you ensure that you will have to pay lower EMIs. But what people don’t realize is that, in the grand scheme of things, you end up paying more than was necessary, in terms of interest. When you apply for a Car Loan, make sure that you choose the shortest possible term that you are comfortable with, in order to minimize the interest outflow.
Focusing Solely on the EMI
There are a number of loan options that ask for lower EMIs and for longer loan periods. Just because the EMI sounds affordable, it does not mean that it will be cheaper in the long run. Always take a look at the bigger picture, calculate the total money you will be paying back, and if the interest seems reasonable. Never make the decision based solely on the EMI.
Not Paying any Down Payment
If the option to be able to drive away a new car without having to pay a single rupee seems too good to be true, it most probably is. The “No Down Payment” option is more like a “pay less now; but more later” deal. You pay zero down payments; this means you pay more on EMIs, which in the end means a higher amount of interest paid. Plus, people generally forget to factor in hidden charges and fees.
Heart over Mind
Going with the gut might be a great option in life, but not when it comes to Car Loans. Mostly, when buying a new car, people have a set budget about the financing they need. Sales talk is designed to break this iron clad resolve. The offers given make people consider spending ‘just a little more’ than their budget; which may cause undue stress in the future.
Not Doing Your Research
Before choosing your Car Loan, it is imperative that you do your homework. For the first time loan applicants, the process can be very confusing. It is important that you find the best deal for your car loan, but even more important is the fact that you know what a good deal looks like. There will be a lot of words thrown about in the loan application; make sure you understand the exact terms and conditions, and that you read everything, even the fine print, before you sign on the dotted line.
All good things come to those who wait; but when it’s a Car Loan, you need to put in your fair share of work to make sure that you get the best possible deal; all the while avoiding the most common Car Loan mistakes that people make.
We are India's No.1 - Most Trusted Financial Services Brand, according to the Brand Trusted Report, 2017 & 2016 consecutively. We are also the largest Gold Financing Company in India in terms of loan portfolio, according to the 2015 update to the IMaCS Research & Analytics Industry Reports, Gold Loans Market in India, 2015 ("IMaCS Industry Report, (2015 Update)"). We provide personal and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time-frame, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements.
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Customers in our portfolio