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5 Things you Should Know Before Taking a Car Loan

Having a car is a dream of everyone but not everyone can afford it. Although car loans sounds easier but way too complicated. All the banks nowadays are too eager to lend you money for your dream car but getting the loan sanctioned is tiresome.

In order to avoid all those horrible surprises that are going to pop up later, here are few important things (use car loan calculaor) that you must do before you make your mind of taking a car loan:

  1. Make sure if you are eligible: You can calculate the EMI once you know the approximate value of your car loan. Banks usually charge you with limited installments but they take up almost 40-50% of your salary. If you have any other loan on your head, this sounds impossible. Some banks are really sensitive about the number of dependents on you so you can make the calculation and the repayment capacity. If you have enough of the financial strength, you can think of getting a loan. This defines whether you are eligible to take the loan or not.
  2. The type of your loan: There are two kinds of car loans that are based on the rate of interest and that are either fixed or floating loans. A fixed loan doesn’t change with the changes in market and this rate is almost 1-2.5% higher than the floating loan. Floating loan varies with the marketing conditions. Although this clause varies from time to time so your EMI also varies with time.
  3. Legal documents: An agreement must be made under your car and it becomes really confusing because the lists of the documents that are needed to take a car loan are really. Some of the banks even add a security clause along with a document like a property or anything valuable so that it can be redeemed in case you fail to repay. This will make you a defaulter. Make a clear check about all the types of legal document as well as the security deposit of the bank if you are serious about the car loan.
  4. You must negotiate about the rate of interest: All the banks of every country offer bank loans, and in order to compete from each other, they raise or lower the interest rates to remain in the business. Before you decide about the car loan and choose a bank, make sure that you have negotiated about the rate of interest well with the bank that you have chosen. Although the bank would help you with the 100% customer satisfaction, still you have to make sure that you cracked a great deal. If you are an old customer with the bank, it can be profitable for you.
  5. Wait for the offers and deals: Often at the time of any festive season, the banks offer great rate cutters in order to attract maximum number of customers. Make sure that you know all about the deals well and get your car easily.

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