Buying your first four-wheeler is an exciting experience. Certainly, you will have many questions in mind while researching the market. Some of these queries would include which company, what model, insurance cover, and accessories, among many other factors.

Another worry may be on how to fund the four-wheeler purchase. If you are in a situation where you do not have the entire amount needed to buy the car, you may opt for a loan.

Several options are available, which is why you may require some guidance to navigate through the vast choice. Before looking at some tips, you must understand how a car loan works.

Car loans – An overview

Banks and non-banking finance companies (NBFCs) offer these loans to enable you to acquire your desired car. The lender will finance the amount and charge interest for a particular period. You must repay the borrowed amount in EquatedMonthlyInstallments (EMIs).

The lender creates a charge on the car and once you repay the loan, you become the full owner of the vehicle. The procedure to avail of car loan online is quite simple and hassle-free.

Features and benefits of a car loan

  • Simple application process with minimal documentation

  • Attractive rate of interest, making it an affordable option

  • Higher loan amount up to the full price of the vehicle

  • Customized and flexible repayment options, ensuring you do not have any difficulty in repaying on time

Tips to find the best loan for your first car

  1. Monitor your credit score

Lenders determine your creditworthiness by analyzing your credit score. A higher score will help you procure favorable terms on the loan. In case you do not have a credit history, you must work on building it for a few months before applying for a loan. Pay the bills on time to ensure that you have a high credit score. Also, if you have too much debt, try to repay some portion, as it affects your repayment capability, according to the lenders’ calculations.

  1. Determine your eligibility

The car loan eligibility criteria are available on the lenders’ website. Some of the basic criteria include:

  • Indian resident

  • Age between 21 and 60 years

  • Salaried or self-employed

  1. Keep the documents ready

Once you determine your eligibility, you may apply for a car loan online. You will have to submit some basic documents to ensure quick approval. Some of the necessary ones include:

  • Identity proof

  • Address proof

  • Age proof

  • Income tax returns (ITRs), bank statement, or salary slip

  • Photograph

  1. Apply with a co-applicant

As a first-time borrower, your income may not meet the eligibility criterion. To overcome this limitation, consider applying for the loan with a co-applicant. While doing this, your income gets added to the co-applicant’s earnings, thereby increasing your car loan eligibility.

How to avail of a car loan

Before you look for a car or a loan, you need to finalize your budget. In addition to the cost of the car, you will incur other expenses like insurance, maintenance, fuel, and repairs. Consider all these while determining how much you can spend.

Although lenders like Mahindra Finance offer flexible car loan interest rates, you still need to make timely EMI payments. Take the help of an online calculator to know the approximate installment you have to pay on the borrowed amount. Mahindra Finance provides funding for all types of vehicles to borrowers who may or may not have income proof.

Do not rush into your decision and take your time to find the best car loan offer. Moreover, if you time your purchase during the festive season or end of the year, you may come across beneficial discounts that can help save some money.

 

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