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Auto Loans Car Financing

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Buying a new car is no less important than buying a house and in this most treacherous world, you have very smart to be able to smell roast and the right deal before the end of a car loan for buying the car you’ve always longed . Given below are a few tips for you when you are on, you want to go to finance your car with an auto loan.

You should not of the allegations of some donors that they will rise to 100% car financing astray. You will find that they will advance or a deposit for EMI and if you ask your calculations correctly will notice that effectively you will be paying more than what you will get. In addition, lenders that the interest rates on car loans are low, you could only half to claim the image.When all factors such as handling fees and method of calculation takes into account EMI, you could find that would be the effective interest rate far higher than what you had expected.

There are some lenders to entice consumers to try, with flat rates. If the effective tax rate to calculate, you will notice that it will be higher on the basis of cash flows than on the normal method of annual and monthly declining balance reduction. The reason is that clients get set (not read) EMI reduction with payments as opposed to normal methods (year, month, declining etc). So you end up paying more interest, in addition to the amount auto loan.

Before signing a loan agreement, you have crystal clear in your mind about all the implications of the auto loan. You have to read the fine print and on the pledge of your vehicle to the financier, the loan that you want to log on, and stamp fees you will have to pay.

It is important to check up the pre-payment charges which are applicable if you wish to pre-pay a part of the loan as and when surplus money is available. Such pre-payments can result in savings as outstanding principal amount would stand reduced after such payments. You can work out the resultant savings if you know the pre-payment charges of auto loans so that you can take the right decision.

You should also find out whether you have the penchant for taking risks. Do you invest often in stock markets or do you prefer to invest in FDs? If you want to invest in a security deposit scheme, it would be necessary to find the answer to the above question. Moreover, you would not get more than 12%-15% p.a. for the money invested under this scheme. If you are a high risk taker, there will be an opportunity cost involved for not earning returns the stock market way.

The depreciation factor is also important as you can only claim depreciation if you take finance in the form of auto loans or hire purchase as a sole proprietor and not as an individual. The financier can claim the depreciation if you lease the vehicle. To understand the interest and principal contribution of EMIs at different points of time, you should find out about the amortization schedule.

The timing of the payment of the monthly installment on your auto loans is very important as your salary might get credited at a later date than the date at which the payment has to be made. You should also look for special discounts as you can always negotiate the final interest rate/EMI on your auto loans. You might be able to get some special benefits also.

You should opt for longer duration auto loans if higher EMIs payments prove to be difficult for you. You can get auto loans for 7 years from some banks although the normal financing period is from 1-5 years. The tenure also depends on the type of car you buy.

Source : http://hhowtogetaloans.blogspot.com/2010/0...-financing.html

 

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