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Follow
these simple car loan basics to structure your car buying process.
Budget
your car. This is the most important thing. Taking finance may help you go
for a costlier model, but in the long run you would be paying for it. And do not
forget the running costs associated with a car. Use our
loan calculator to check the monthly installments you would
be paying, straighten up your financial records to get an accurate picture of
where you stand, and budget for the future.
Your
credit card report. The first thing your dealer would look at is your credit
report. It is therefore a wise step to acquire a copy and study it for bad factors.
Prepare yourself in advance for explanations on these factors. Also consider taking
your spouse’s credit report into account.
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Striking
a deal. Finalize the price range of the model without revealing
your financing plan either through the same dealer or other credit
agencies. Decide on your downpayment. Do not go for long-term loan
periods for minimizing the downpayment. See our Advice
section for more information.
How
much finance? Decide on what part of the cost you wish to take loan for. Do
not finance the entire cost. Go for approximately 80% and pay for the rest.
Checklist.
Before signing anywhere, run a check on the following points: amount of the loan
agreed upon, interest rate, number of installments, extra fees and charges for
new purchase, and the warranty deed.
Following
the above car loan basics will help you secure a good loan with confidence.
Documents
required for a car loan: Some or all of these may be required:
Proof
of income
Proof of residence
Driver’s license
Credit report
Personal references
Others: phone bills, bank statements, salary slips, tax returns.
Insurance
Coverage: Any car finance deal requires you to insure as well.
Read the basic elements of car insurance here: Car
insurance basics
More help:
Many trade associations help buyers for new
and second-hand purchases. Some of these are: American Automobile
Association which consists of motor clubs, Council of Better Business
Bureaus which helps in settling arbitrary disputes between customers
and dealers, and National Automobile Dealers Association which
publishes the official used cars guide.
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