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Want To Buy A Car? Five Things To Know On How To Get Low EMIs

For a better deal, in terms of low equated monthly installments (EMIs) and rate of interest, it becomes very important to check out the various offers and discounts given by the different sellers.
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Maintaining a good credit history with banks helps while going for a vehicle purchase.
Maintaining a good credit history with banks helps while going for a vehicle purchase.

Highlights

  1. Carmakers often tied up with banks to offer attractive offers to customer
  2. Usually banks offer low interest rate if customer is known figure to them
  3. Based on relationship, lenders may lower interest rate, says an expert
Buyers may have a lot of options while purchasing a new car but for a better deal, in terms of low equated monthly instalments (EMIs) and rate of interest, it becomes very important to check out various offers and discounts given by different sellers. 

To lure customers, auto makers generally offer cashless facilities and fully financed loans. However, there are many other aspects that need to be considered, here are a few of them:

1. Rate of interest: Usually banks offer a low interest rate if the customer is a known figure to them. For instance, buying a second new car from the same bank may provide comparatively a lower rate of interest. When asked, Deal4Loans.com spokesperson Rishi Mehra said, "You can negotiate for a better car loan offer if already a customer of the bank or non-banking finance company (NBFC). Based on how well the relationship been, the lender can lower the interest rate. It also depends on your credit score."

2. Credit history: Maintaining a good credit history also helps while going for a vehicle purchase as it reflects the previous repayment cycle of the buyer. 

"A credit score of 750 and above will help you sail through the approval test of a car loan. If the score stays below the said level, the lender can reject your loan application," Mr Mehra said.

3. Negotiation and discounts: Buyers should never settle after getting a quote from a particular seller or a bank. They should always explore what are offers and interest rate other banks are providing. Lenders always provide cash discounts, exchange bonus or gift cheque in the festive seasons and in yearend. 

"Car manufacturers do come up with lucrative discounts and offers during the festive season and at the end of the year to push up the sales of the new models. Also, these offers allow the makers to dispose-off the excess inventory pile-up."

4. Hidden charges and pre-payment of loans: How many of you read the "Terms & Conditions" page carefully? This may sometimes cause confusion while going for an early loan closure. Always read or ask the bank executive to explain you the lending conditions and the procedure for pre-payment of loans. This might help you to get rid from paying the extra charges.

Hidden charges include stamp duty, foreclosure charges, late payment charges, ECS/cheque swapping charges, legal, repossession & incidental charges, duplicate no due certificate charges, CIBIL charges, amortization schedule charges and cheque bounce charges, among others.

"You can pre-pay the car loan only after 6 months-1 year from the date of disbursement. Well, you can get away with no fee on pre-payment of the car loan at few lenders like SBI. But most of them will charge around 3%-7% of the outstanding principal on the date of pre-payment," Mr Mehra added.

5. Nationalised banks: Buyers should try to avail a loan from nationalised banks as it usually offers comparatively low rate of interest. If you are in an existing relationship with the bank it might offer you a much attractive rates with lower EMIs. The interest rates are further relaxed for women.

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