You may have been dreaming of owning a car ever since you were a kid. However, you realize that buying a car is an expensive affair. However, you can always avail a car loan to ensure that you realize that dream. But, you should also know what factors you should consider before applying for a loan. Knowing these factors will allow you to avoid making mistakes when you avail the loan.

7 Common Car Loan Mistakes

Interest Rate

When you are applying for a loan, you should ensure that car loan interest rate is not the only thing that you are focused on. There are a lot of factors that affect the interest rate of a loan. So, don’t select the lender with lowest interest rate.

EMIs

EMIs are a crucial aspect of every loan. However, the value of EMIs is not the only thing that you should focus on as there are other factors that affect the loan including the number of EMIs. Additionally, if you select a lower value of EMI and more number of EMIs then you will end up paying more as the total loan amount will be more.

Tenure of the loan

The tenure of the loan is an important aspect as it is the duration in which you have to pay not just the total interest but also the principal amount. But, if you select a higher tenure then you may end paying more as the total amount of the loan would be higher.

Car Loan Tax Exemption

If you think that you would be eligible for car loan tax exemption then you should know that not all cars are eligible for that. Under Section 80E of the Indian Income Tax Act, only cars purchased for commercial purpose are eligible for car loan tax exemption.

Eligibility

You should always go through the eligibility criteria thoroughly before applying for a loan. The eligibility criteria will let you know whether you are eligible for the loan or not. Otherwise, you may just end up wasting your time.

Affordability

You should use the loan calculator to ascertain whether the loan is affordable for you or not. In addition to providing you the car loan interest rate, it will also provide you insight to know whether your financial situation is strong enough to handle the loan.

Used Car Loan

Some lenders do not allow loans for used cars. So, before applying for a loan, you should ensure whether the lender allows loan for used cars or not. Additionally, you should also determine the maximum amount you can avail.

Instant Car Loan even For Used Cars

As mentioned above, there are a lot of lenders that do not allow loans for used car. However, PaySense allows you to borrow for buying a second hand car. Additionally, if some amount from the loan remains after the purchase, you can use it to repair the used car.