Taking a Car Loan? Common Mistakes to Avoid

Choosing the right auto loan is as important as buying the car itself. While buying a car, you must ensure that it meets all your requirements and is within your budget. The same goes for online car loans. Although getting an instant car loan online is relatively easy, you must avoid making mistakes in picking the one best for you.

The most important thing you need to do before applying for a loan is to do proper research instead of looking to secure funds as quickly as possible. You must closely study the terms and conditions to save yourself from paying higher interest rates or other hidden charges. 

To make things simpler, here is a list of common mistakes you should avoid when you apply for a car loan online:

#1 Not searching for the best lender

Looking for the best lender when taking an auto loan is one of the most important factors to ensure you get the best deal. The interest rates vary across lenders; a higher interest rate means a higher repayment amount. So, before you apply for a car loan, conduct thorough research on all banks and Non-Banking Financial Companies (NBFCs) and choose the lender that provides the lowest interest rate. 

You can also look for a cash loan online on car loan apps for better results. Ensure you consider important aspects like the repayment tenure, required documents, repayment options and eligibility criteria.

Also Read: How to finance a used car

#2 Not knowing your Credit Score

Your credit score plays a vital role in your instant car loan approval. A credit score of 750 to 900 will make it easier to get your loan. A higher credit allows you to better negotiate an affordable interest rate and keep costs low. 

If your credit score is lower than 700, the lender may not give you a great deal on an auto loan. So, before you apply for a loan, check your credit score. Better yet, pick a lender like Fibe, which offers instant car finance without relying heavily on credit scores.

#3 Not having any other financial source

Always make sure that you are not solely relying on the credit offered by a lender. It is always advisable to have access to funds from your savings, investments and emergency corpus. This will help you pay the down payment fee, insurance fee and registration fee.

Lenders often suggest taking up personal loans along with auto loans to cover these expenses but taking an instant personal loan will add to your debt pile. So, be sure to choose your options carefully.

#4 Not selecting a short-term loan

Borrowers often select long-term loans because the EMIs are lower than short-term loans. But in the long run, the total interest you end up paying will be higher. Moreover, long-term loans also mean that you stay in debt for a longer period. 

On the other hand, online car loans with short-term repayment schedules can help ensure that you repay the loan as early as possible and keep the costs to a minimum. However, you should make sure that you can afford to pay high EMIs in a short period, as your credit score will take a massive hit in case of defaulting on repayment. 

#5 Buying unnecessary services

When you apply on car loan apps or on lenders’ websites, you are often given the option to purchase additional services like insurance schemes. Although these schemes are beneficial, it is important to remember that you may not need all of them. So, make sure you assess your needs and carefully select only the services that you need. 

#6 Focusing solely on EMIs

Focusing solely on EMIs can often hurt your overall financial health. Low EMIs tend to attract borrowers, but it is not the only thing that you should consider. Before availing an instant car finance, ensure that you calculate other factors like the tenure, disbursement period, processing fees, early repayment penalties, late EMI fees and other terms. Considering these is crucial because, collectively, they can cost a hefty amount.

Making any of these mistakes could potentially harm your finances. For a smooth and hassle-free borrowing journey, avoid making these mistakes and always do your due diligence. Try to look for a car loan app that offers a simple and easy process. 

You can opt for Fibe Car Loans and secure a stress-free option to get that dream vehicle quicker and without hassles! Download the Fibe app, or simply log in to our website and get started. 

FAQs on Common Car Loan Mistakes

How to get a 100% loan on a car?

There are many factors that influence the car loan amount you can get. This includes your income, age, credit history, the model you select and more. However, if you have a good credit score, you have a better chance of getting a loan for 100% of your car’s value.

Can I get a car loan with a low CIBIL score?

Yes, lenders allow you to apply for a car loan online with a low score if you can provide proof of a stable income and assure timely repayment. Moreover, you can apply with a co-applicant or guarantor to get an auto loan.  

Can I get a car loan with a 500 CIBIL score?

While most lenders have a minimum credit score requirement of 750, you can apply for a car loan with a 500 CIBIL score if you can afford to pay higher interest. You can also choose lenders like Fibe that do not rely solely on credit scores while assessing a loan application. 

Can I get a car loan without a salary?

To get a car loan, you must have a steady income. However, if you don’t have proof of income, such as a salary slip, you can provide your bank statement as an alternative.  

Can I get a car loan if my salary is ₹10,000?

Yes. You can apply for a car loan online if you have a steady job with a salary of ₹10,000 per month. However, the loan amount may be lower due to a lower repayment capacity.

Is it possible to get 0% interest on a car loan?

This is usually not possible in India as all banks charge you an interest on the financing they offer to purchase a car. 

Can I buy a car with a ₹40,000 salary?

Your car loan eligibility depends on many factors, such as your monthly income, CIBIL score, existing credit, etc. However, many lenders will give you a decent loan amount with a 40k salary per month, provided you meet other parameters.