MANILA: Buying a car is a prolonged process, one that requires a plethora of tasks, from researching to deciding and finally acquiring the car, but with CarBay's easy solutions, you can get your hands on your new ride, hassle-free.
In our previous article, we provided simple tips regarding buying a car. Today, we will talk about how to finance it. Numerous financing options, easy loan availability and pocket-friendly credit policies have driven growth in the automobile industries. Banks and financial institutions are lending out money more readily, with flexible terms and payments. If you are a first-time buyer, navigating the maze of financial instruments for in-house dealership financing and bank financing can be a daunting task. To aid you to select the best possible car loan for your shiny new wheels, we at CarBay presents steps that will ensure you get your hands on a great financial deals.
After selecting your dream car, you might come across a financial deal that has it all – low EMI, less interest rate, and easy payment structure. If you are planning to buy a new car – shop around first and get quotes from all dealers. This will help you select the best possible deal that suits your needs. After selecting the dealer, that is providing you with a desirable deal, do not forget to negotiate. Negotiating on a deal helps a great deal in lowering its costs. You can pitch other competitor's quotes as well in order to grab comparatively reasonable deals. Hence, try to bargain.
Have you ever thought, why on the same loan two different people are charged with different interest rates. Well, this is because of your credit score. A credit score is a score bureau assigned to you based on how much debt you have, how good you've been about paying bills on time, how long you’ve been using credit and your debt to income ratio, which is the amount of debt you have versus how much money you earn. If your credit score is low, lenders charge steep interest rates to cover that risk. You can find your credit score at various online websites, which will help you to contemplate your interest rates. If you have any existing relationship with your banks either in the form of bank accounts of credit cards, leverage that. As many financial institutions offer discounts to their existing customers.
While taking a loan, we often just regard monthly installments and forget about the total loan value. When you privately calculate the monthly amount you want to spend on your car – only then you should consider the monthly payments, after that your complete focus should be on the total loan amount. Some lenders may focus on the payments to induce you to borrow more money by extending the number of months you pay. That way they make more in interest, and you have to drive your aging car longer. The longer term reduces the monthly payment, but it will also drive up your total loan cost.
You sign all the paperwork, get the keys to your shiny new car and drive it home, assuming the deal is done. Few weeks later you realize that there is more than meet the eyes. Review the paperwork thoroughly as the agreement lasts for years you don't want any shocks later. While meticulously reading your loan paperwork, be sure to check for these points:
Mandatory binding arbitration: Mandatory Binding Arbitration is a contract provision that requires the parties to resolve contract disputes before an arbitrator rather than through the court system.
Variable interest rate: Figure out the highest possible payment. If you can't afford it, the loan's not for you.
Prepayment penalties: How much will it cost you to pay off the loan early if you want to sell or refinance? Some banks charge rates as high as 5% of the total loan amount if you pay off your loan early.