Whether it is about a financial emergency or taking loan for buying any asset, a vehicle loan can help in many ways. It is the quickest way to get usable cash without keeping any valuable asset as collateral in case of secured loan. Personal loan from bank is one of the costliest forms of loan because it is not backed by any asset and banks are at higher risk by giving unsecured loans. If not managed properly, personal loan might do more harm than good. So, as a smart borrower, opting Pre Owned vehicle loan can be good choice and you need to keep these five things in mind before applying for a Vehicle loan.
- Consider your credit score:
Credit score is something that bank always checks before granting any loan. It becomes more important in case of unsecure loans. It shows your credibility as a borrower and helps bank to decide how big the risk you are for them.
- Take a closer look at all your income sources:
You should always analyze your current and future obligations before taking loan. Test your credibility for the worst situation. Taking loan is always an easy way out but it can easily turn into nightmare if not managed properly. You should always check your needs on EMI calculator; it can give you a clear picture.
- Decide the amount wisely:
It is never recommended to take more than your need. A higher amount means a higher debt and a higher interest pay out. Analyzing your needs before applying for loan is highly recommended.
- Negotiate a better deal:
You should always compare between different banks and lender available near you. There are multiple factors to compare such as interest rate, amount of loan, other terms and condition, etc.
For example: a bank may charge lower rate of interest but the prepayment penalty may be comparatively higher when compared with Private lenders.
- Read the terms and conditions:
While banks are required to disclose all important fees and charges, you should still read between the lines to know how it works out best for you. There are several things to consider here such as the processing fee, loan tenure, loan cancellation or foreclosure charges. These hidden charges, if not considered in the beginning, can catch you off-guard at a later date. So read the terms and conditions; do not rely on the bank’s executives for all the details. Do your research and make a smart choice- Private Finance or banks ?
After you got your loan there are multiple things you should keep in mind to have a strong financial position. So, there are four things you should keep in mind after applying for loan.
- Never delay or miss an EMI:
Once your loan is sanctioned, make sure you pay the EMIs timely as it boosts your credit score and reflects favorably on your credit report as well. However, any kind of delay or misses in payment pulls down your score and you also end up incurring penalties and fines. In case of any emergency keep the communication on record for non -payment on time with the lender.
- Prepayment of loan if you have funds:
It can help in substantial saving in interest cost. However, make sure the saving in interest component through prepayment exceeds the prepayment charges of loan (if any). Also, increasing your EMI amount every year can save you on the interest cost as the principal goes down and also helps in closing the loan sooner.
- Do not use Emergency funds:
Never use you emergency funds to repay the loan. Even for prepayment of loan, never use your emergency funds kept in savings account, liquid funds, etc. as the purpose behind maintaining these funds is to meet financial exigencies such as job loss or accident. Emergency fund should be at least thrice of your monthly expenses.
- Avoid additional loans:
An additional loan increases your financial burden substantially, especially when you haven’t closed the current loan yet. Since Many Private Financier in K2D FinServ Provides Additional loan to their good customers and every loan comes with interest cost along with principal to be repaid, avoid taking a loan until you have already paid the current one in full.
- In case of Default:
In case of default of repayment of loan surrender your vehicle yourself instead of lenders to take possession. This will maintain a good relationship with your nearby lender for future financial needs.
In the end I would say that every individual has its own decision of taking loan and this article is all about creating awareness about the loan. Also individuals only consider loan offers from bank, but there are various private financiers in the market who can provide you a customized loan as per your requirement which a bank will never do because banks have a wide customer spread. Private financiers. You don’t need to worry about procedure, timeliness, amount and interest rate in case of private financiers as they have multiple options to offer to customer. You can find nearby best private financier in K2D Finserv, you just need to raise a request and you will be contacted by these financiers with various options out of which you can select the best which matches your requirement.