Purchasing a new or second-hand car is a big decision as it involves a huge sum of money. For the same, many first-time car buyers look out for finance options. However, like with any loan, one should consider the positives and negatives before signing the papers. Knowing how a car loan works, you can prevent mistakes and choose the best car loan for you. To help you in making a good car loan decision, this blog outlines three mistakes to avoid while you apply for car loan online.



Mistake #1: Not Estimating Your Overall Budget


Before applying for a car loan, you should check your financial condition to ensure that you can easily repay the amount. You may fall behind on payments if you do not figure out how to incorporate monthly payments into your budget. This might result in outstanding debt and significantly affect your credit score, impacting your credibility to get loans in the future.


Mistake #2: Choosing the Inadequate Loan Term


It is important to use an EMI calculator when choosing a loan term. A car loan usually has a term of 1 to 7 years, depending on the type of loan chosen. A shorter loan period means higher EMIs, but you finish paying off the debt sooner. A longer loan term means lower EMI payments but a higher interest payment.


Mistake #3: Not Reading the T&Cs Carefully


If you want to avoid unforeseen problems later on, you must first understand the loan's terms and conditions. So, before signing anything, ensure that you read the agreement thoroughly and understand the conditions. If you have any questions, you should clarify them with your lender.


When you get a car loan, you don't have to deplete your savings or delve into your long-term assets, such as fixed deposits. So, keep the points mentioned above in mind to avoid these common mistakes and do thorough research before deciding on a loan to purchase your desired car.

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