The Do's and Don'ts of Applying for a Car Loan in 2021

Remember how you felt when you dreamt of buying your first bike as a teenager? The sense of all that freedom and excitement? It seemed as if the world had opened up to you, and that getting a bike was an initiation for stepping into adulthood. Besides, bikes are cool!

Well, adults pretty much get the same feeling when they buy their first car. 

However when it comes to buying a car, very few can buy it with cash just out of their wallet. Most people have to take out a car loan for that. 

In this article, we are going to tell you about the Do’s and Don’ts for applying for a Car Loan.

Select the right car

Before going to the showroom and buying the first shiny car you spot, you need to figure out what type of car you need? If you go on frequent trips with your family, an SUV can be the perfect choice due to its huge space. However, you’ll find it hard to park in the city. If it is for special occasions, you may want to buy more luxurious models. If you want more heavy-duty protection, try a Scorpio or even an imported Hummer!

Don’t make a mistake in calculating how much you can afford

This is one of the biggest mistakes you can make. This is one of the most surefire ways of falling in a debt spiral. When taking a loan, a lower down payment translates to a lot of money to be repaid back as loan amount.

If you have loans already, rethink about taking yet another one. Sure you may think you can afford this loan too, but together with all your existing ones? That can be a problem. Additionally, ensure that your EMIs across all your loans are less than ½ your monthly income.

Think about your credit score

When taking a loan, you do need to think about keeping a good credit score. The higher your credit score, the lower your loan interest rate can potentially be. The lower the score is, the higher it can potentially be. In fact, if your credit score is too low, you may not get any loan at all, and even if you do, it will be on very steep and unfavorable terms. 

Don’t choose the very first financing offer you get

Your very first financing offer may be from the car dealership itself if you have tie-ups with financing companies. However, what you should be doing is browsing through multiple financing deals before picking one. Of course, then you can pick the one that suits you the best.

As you can see, there are certain things which you should be doing and should not be doing when getting a car loan. Here’s hoping you get the loan, and safe driving!