Factors to consider before choosing the right car loan

Choosing a car loan could be easy, but finding the best deal may be a bit difficult.

11:21 28 September 2013

There are many lenders where you may apply for a car loan, but if you are smart enough to want to stretch and maximize use of your every penny; then it wouldn’t hurt to extend a little more effort and find the best deal suitable to your needs and financial capabilities. Applying for a car loan can be fast and easy as many loan offers are available on the internet. Before applying for a car loan, you need to:                   

• Understand Terms and Conditions Carefully

Every loan agreement has its own terms and conditions. Carefully analyse them and make sure you ask about anything which you may not understand.  Clarifying matters which are unclear to you may prevent unwanted charges which might pop up eventually. Check if there is a clause regarding early repayment fee just in case you can have a chance to repay your loan earlier than expected.

• Compare interest rates

Base your comparison using the annual percentage rates or APR rather than the flat rates. This will enable you to compare the real cost of the loan.

• Cost of Car and Maintenance

The cost of the car as well as its maintenance including the registration papers and insurance must be considered also before actually buying a car. If you will be allowed to pay a deposit on the car, make sure that you have already set aside money for other expenses such as the insurance and registration documents before you decide on the amount that you will deposit. After the deposit, you then have to analyse how much you could afford to pay each month and for how long you intend to repay the car loan before deciding how much amount you will need to borrow.