Vehicle Loan Guide for First Time Buyers

vehicle loan

Buying a car is often the first major financial commitment you make. It’s as though you’ve taken the first step toward a prosperous and happy life. Getting your hands on a sparkling new set of wheels can be challenging if you don’t have enough money to buy a new car outright. If you find yourself in this scenario, a vehicle loan could be really beneficial. Before you make any decisions about buying a new automobile, you should do your homework and learn how to get the greatest car loan deal possible. 

Tips for a first-time buyers

The best way to make an informed selection is to properly investigate the numerous loan options available. Some lender websites will let you do an online eligibility check to see what kind of loan you qualify for so you can make an informed selection. It’s critical to be well-informed about the products and to weigh the features and benefits to select which offer best meets your credit requirements.

Eligibility for car loans

  • The candidate must be an Indian citizen, whether in rural, semi-urban, or metropolitan areas.
  • The borrower must be at least 18 years old and no older than 75 years old to apply for a car loan.
  • He or she should earn at least Rs. 10,000 each month.
  • A paid or self-employed professional with at least 2-3 years of experience is required.
  • The candidate must live in an approved residence with ample parking space, either inside or outside.
  • He or she should have lived in the same place for at least a year.

Steps involved in applying for vehicle loans

To begin, request a copy of your credit report well before asking for a loan to check your credit score and reduce the likelihood of rejection. Lenders typically require a credit score of 750 or above to approve a loan. If necessary, you should focus on raising your credit score to at least 750. Depending on how terrible your credit issue is, this can take anywhere from 4 to 12 months. If you have a low credit score, you can work to raise it so that you are loan-eligible before applying for a loan.

It’s also a good idea to look over your credit report for any inaccuracies that are lowering your score unnecessarily. This could include any reporting inaccuracies, such as presenting a loan as outstanding when you have fully paid it off. It’s critical to register a dispute as soon as possible to have these inaccuracies corrected so that your credit score isn’t pulled down unnecessarily.

Consider these factors when applying for a car loan

Choose a shorter loan tenure

A shorter loan term ensures that the loan is paid off in full sooner, resulting in cheaper interest costs. As a result, choosing a shorter loan repayment term is always recommended.

Know your EMI repayment ability

In the case of car loans, the loan might be repaid in monthly EMIs. You can use an online vehicle loan EMI calculator to figure out how much your monthly payments will be on your car loan. As a result, you will be able to set up your budget in a more efficient manner.

Other service charges

Aside from processing fees, the bank will levy pre-closure/foreclosure fees, stamp duty fees, late payment fees, and part payment fees on your car loans. These fees may differ from one bank to the next, thus increasing your loan’s final cost. As a result, it’s crucial to double-check them all ahead of time.

Fill up the application form

You must complete and submit your loan application form together with the required papers. Make sure the form is completely filled out and that you include all original papers.

Application verification

To determine your eligibility, your documentation and credit profile will be checked. Your loan application will be completed faster if you are deemed to be eligible.

Loan approval 

Banks typically take 1 to 5 days to approve your auto loan after verification is finished. This period may vary from bank to bank depending on the borrower’s credit history.

Disbursal of the loan

The loan amount will be issued either to your bank account or straight to the vehicle dealer with whom you will be purchasing the car once your loan has been approved.