You must plan ahead of time how much money you will need to borrow for a car loan. However, do not base this figure on your new car's ex-showroom price. Collect as many quotes as possible from different lenders to get an idea of how much money you'll need as a loan. If you calculate the auto loan amount based on the ex-showroom price, you might end up with nothing left over to pay off the taxes and car insurance.
However, in order to determine how much you would require as a car loan, you must first calculate the amount you already have set aside for your new or used car. Remember that the more money you borrow as a loan, the more money you will have to repay with interest. As a result, try to keep the loan amount as low as possible. Furthermore, loan lenders will only give you a loan if they are confident you will be able to repay it. Will you be able to afford the loan with the monthly EMIs?
Are you looking to trade in your old car? If this is the case, deduct the amount you would receive if you traded it in when calculating the amount to be borrowed as a loan. Keep the loan amount as low as possible. You will then have a smaller amount to repay as well as a lower interest rate. In addition, the interest rate is determined by the amount borrowed. So think carefully.
If you're trading in your car, don't just take the dealer's word for it without doing your own research. Search the Internet for the approximate value of your used car based on the model, year of manufacture, distance traveled thus far, mileage delivered, and so on.
Do you have any previous loans that you need to repay? If so, take care of them first. Consolidate your loans if you have too many and are unable to repay them all at once. Having too many loans in your name does not impress the lender. He needs to know that you are capable of repaying the car loan.
When it comes to interest, it's best to calculate it online. As previously stated, obtain multiple loan quotes to get a sense of current interest rates. Compare the quotes you've gathered, shortlist the ones with the lowest interest rate and EMI, then negotiate with the lender for an even lower interest rate, and choose the best auto loan.
Furthermore, don't forget about the paperwork. Read all of the documents thoroughly to avoid falling into a trap later on. Before signing the loan documents, make sure you understand everything. Make sure you understand all of the payment and interest details.
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Source: Ezinearticles
