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Should You Take a Car Loan or Save to Buy a Car?

Whenever it comes to acquiring a new car, you might have second thoughts on taking out a loan to finance it. It can seem like a big burden to bear, and nobody likes the thought of an extra monthly repayment to have to deal with.

But, unless you’re one of a handful of people who have surplus cash ready for purchasing a car for yourself, a car loan is likely your only option!

Unlike popular belief, car loans are no longer a burden. You can easily afford your dream car with flexible loan tenure, comfortable interest rates, and fantastic repayment terms. And the best part? You can significantly save your personal funds.

Why is a Car Loan a Better Option?

There is no wonder why long-term loans are considered for big-ticket purchases like a new car. They come with lower interest rates and offer you the freedom to make a purchase without needing to save the full amount in advance. Here are some reasons why you should opt for a car loan.

Flexible Repayment Methods

Similar to loan disbursement, the repayment methods are pretty straightforward. You will also have different equated monthly installment (EMI) payment options to choose from. Thus, you have the privilege to select according to your monthly income flow.

The two most common EMI payment options you will come across are:

  • Offline EMI payment via cheques
  • Online EMI payment via website or mobile banking

Appealing Interest Rates

The interest rates of all car loans available in the market are incredibly affordable. So if you have a comparatively lower salary, it can still be affordable. Moreover, you have the privilege to choose a floating or fixed interest rate, whichever suits you best.

As online car loans are quick and easy to obtain, you can shop around to find the most favorable loan terms. You can also use a loan calculator for cars to check the amount you are supposed to repay.

Can be Obtained by Both Self-Employed and Salaried

Whether self-employed or salaried, nearly all individuals can avail of a car loan. The best part about most vehicle loans is that they don’t have as strict of an eligibility criteria as some other loans do. So, even if you don’t earn within the taxable income range, you’re still eligible to use this loan.

Collateral Facilities

All unsecured loans demand collateral. So you need to provide something as collateral to the lender. Thus, you will have complete ownership of the purchased car while repaying your loan.

On the other hand, if you opt for a secured loan, your car will be used as collateral. And after you have completely repaid your loan, you will become the sole owner of your car.

Save Big

If you’re thinking of purchasing your dream car with your funds, we’d suggest you reconsider it. Instead of investing your money in purchasing vehicles, you can always use them for other essential requirements.

Personal expenses, medical emergencies, and other expenses are always bound to come up. So it would be wise to keep your savings for them instead.

If you can, choose a loan that comes with the lowest down payment. So, in this case, you will not have to shell out cash you don’t have upfront. Besides, a car loan comes with an easy disbursement procedure and minimal hassles, if any at all.

Tips to Choose the Perfect Car Loan

Almost everyone conducts thorough research before deciding on which car to purchase. And we’re very sure you’ve done the same. But do you put your efforts into researching the first loan your dealer offers? We suggest you must.

A compelling car loan will let you enjoy a smooth and hassle-free experience. So, what is the perfect way to obtain good car loans? Here are some fantastic tips to help you make the right choice for your car loan.

Copyright: Carolina Grabowskabi of Pexels I License: CC0 Public  Domain

Hand-Pick the Right and Suitable Deal

Car dealers having excellent relationships with banks offer you the finest finance deals. So you need to determine the payment charges, processing fees, interest rates, etc. Doing this will help you handpick the right deal from reputed dealers across the country.

Check for Your Car’s Eligibility

Car loans usually come with different eligibility criteria. So before acquiring your loan, thoroughly check whether your dream car meets all requirements.

Make Sure Your Credit Score is Good

Having a good credit score is always necessary for being granted higher loan amounts. Being a credit-worthy customer will let you obtain loans at better rates.

Approach and Consult with Your Existing Bank

Whenever it comes to obtaining car loans, it’s always better to approach your existing bank. This significantly reduces hassles and can save you lots of time.

Obtain the Requisite Amount

The approach to acquiring a car loan differs from bank to bank. While some might offer a loan on the on-road price, others might ask for large down payments. So accordingly, you can acquire a loan that suits your repayment capabilities.

Compare Before Sealing the Deal

It is evident that most financing terms are comparatively more accessible, and lenders make it such. So before you opt for a suitable car loan, you can always compare loans in minutes. Also, make sure you compare the EMI payment terms before closing the deal.

This will be of great help as you can purchase your dream car without straining your pockets unnecessarily.

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