9 things you need to know before getting a car loan

car loan application: Here's what you need to know before applying for a car  loan - The Economic Times

Getting a car is very exciting, but before you rush into a loan, there are a few things you should know. Here are 9 tips to get you started:

Know your credit score

This is one of the most important factors in determining your loan rate. Check your credit report and score before applying for a loan so you know where you stand. It’s a good idea to take a thorough look at your credit history too, and if there are any errors, dispute them with the credit bureau.

Consider a down payment

A down payment can help reduce your loan amount and interest rate. It’s a good idea to save up as much as you can for a down payment, but it can be worthwhile even putting down 20% or less. Most lenders won’t require you to make any down payment, but it could save you money in the long run.

Get pre-approved

Getting pre-approved for a car loan shows the lender that you’re serious about borrowing money and have been approved for a certain amount. This will also help you narrow down your choices when shopping for a car.

Get the best interest rate possible

It’s important to compare interest rates from different lenders before you decide on a loan. The interest rate on your loan will have a big impact on the overall cost of the car. The lower the interest rate, the less you’ll have to pay in interest over the life of the loan.

Be aware of extra fees

When taking out a car loan, be aware of any extra fees that may be charged. These can include an origination fee, which is a fee charged by the lender for processing the loan, and a prepayment penalty, which is a fee charged if you pay off the loan early.

Read the fine print

Before signing any paperwork, make sure you read and understand the terms of the loan. This includes the interest rate, repayment schedule, and any extra fees that may be charged.

Know your budget

It’s important to stay within your budget when buying a car. Don’t borrow more money than you can afford to pay back each month. Consider all of your expenses, including car payments, insurance, gas, and repairs, when creating your budget.

Create a savings plan

One of the best ways to get ready for a car loan is to start saving up for a down payment. If you can save up 20% or more, you may be able to get a car loan with a lower interest rate. Try to set aside a little money each month so you can afford your dream car.

Shop around for the best rate

Don’t just go with the first lender you find. Take the time to shop around and compare interest rates and terms from different lenders. This can help you find the best deal on a car loan. With a Driva car loan you’ll be able to compare all of your best loan options in one place.

These are just some of the things you need to know before getting a car loan. By following these tips, you’ll be on your way to getting the best deal possible on your new car.