5 Tips to Negotiate on a Car Loan

The new reforms passed by the Government has given a tremendous boost to the rural connectivity program. Under this plan, around 100 kilometers of rural roads will be constructed daily. Several car manufacturing companies are working overtime to develop low-cost vehicles to enable people in villages to own a four-wheeler.

Historically, people living in rural areas of the country were unable to afford a car due to high costs, bad road conditions, and unavailability of loans. All these problems have been overcoming with many lenders offering affordable and quick automobile loans.

Getting a car loan is now easy. Many lenders offer loans for new as well as used cars. The entire process is simple with minimum documents requirement. Borrowers are also assured of not facing any difficulties with flexible repayment options. Moreover, the loan amount may be repaid in Equated Monthly Installments (EMIs). The entire procedure from loan application to approval is completed within a few days.

Here are five tips to help you negotiate on the loan.

1. Negotiate car’s price

One of the best methods to reduce the car loan EMI is to negotiate its price. Most car dealers make big profit margins when they sell a vehicle. It is, therefore, recommended that buyers check with several dealers to bring down the cost of the car as much as possible. Often, dealers provide discounts and special offers especially during the festive season and buying a car during this period may help lower the cost.

2. Check for the lowest interest rate

These days, several banks and non-banking financial companies (NBFCs) offer automobile loans. As a result, borrowers are able to enjoy lower car loan interest rates. Most buyers rely on the dealers to arrange for the loan. However, the interest rates may be higher from these lenders because they often pay a commission to the dealers. Checking with other lenders is recommended to ensure borrowers receive the lowest interest rate.

3. Choose a short tenure

Car finance is available for as long as five years. Most buyers often choose longer loan tenure to reduce their EMI. However, individuals overlook the fact that when they opt for a longer duration, they pay more interest. It is therefore recommended that borrowers choose a shorter tenure if they are able to afford a higher EMI. A shorter duration will help borrowers save a significant amount on their loan repayments.

Additional read: Tips To Reduce Your Car Loan Emi

4. Understand terms and conditions

Most people do not read the loan agreement before signing. However, it is important to read and understand all the terms and conditions prior to making the decision. Clearly understanding various features like interest rates and prepayment penalties is crucial. Seeking clarifications from the lenders before signing the agreement reduces the possibility of any difficulties in the future.

Buying a car is a huge financial decision. Based on your income, you may avail of up to 100% of the ex-showroom price of the vehicle. An affordable automobile loan now makes it possible for you to drive away your dream car.