Opting for car loan? Five fundamental things you need to check

Car loans make it possible for people to buy a car even when they currently don't have the full amount required for making the purchase. Many times, people think that all they need to pay is an EMI on a car loan. However, there are some other fees as well that they need to keep in mind. Also, there are some basic things that one should check while choosing a car loan. Usually, car loans are given for a tenure of up to 5 years. But, there are some lenders which issue car loans for up to 7 years, such as the State Bank of India and Punjab National Bank. A longer-term car loan reduces the EMI but the overall cost of the loan increases because of the higher interest.Here is a list of things to check before choosing a car loan:Processing feeThe processing fee of a car loan can go up to Rs 10,000. Many lenders decrease or waive off their processing fees in the festive season. So, make sure that you don’t get charged a higher rate of interest or any additional charges to make up for the concession or waiver of the processing fee.Credit reportInterest rates on loans are decided based on the parameters like income source and credit score. A poor credit score can make the loan rate high. Ensure your credit score is good before you apply for a loan. Keep in mind that non-payment of EMI reflects negatively on your credit report. It lowers your score and limits your access to financial products in future.EMI affordabilityMost lenders prefer your total EMI to be within 40 percent of your total monthly income. Be aware of your EMI affordability, and try to take a shorter loan tenure because that will decrease your overall loan burden.Prepayment chargesMaking prepayment of your car loan can be beneficial in reducing the rate of interest. While choosing your lender, opt for the one that imposes the least number of restrictions and charges on making prepayments.Compare the loan offers with other lendersCompare the loan offers from a wide range of lenders to get the best option.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.