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January 09, 2016 14:30

It is one thing to get excited looking at the sheer options among new cars available in the market today and another to actually sitting down and signing across the dotted line. Moreover, nine out of ten buyers in India prefer to finance their purchase. So if you are among the one in ten from the previous statement, then stop now and go spend it reading something worth your while. The remaining majority of you, pay close attention to what we’re going to tell you, for you must know about these charges before applying for a car loan.

Buying a car involves the making of a serious financial commitment. Apart from the purchase cost, there is also the question of maintenance and upkeep which are part and parcel of the ownership experience. That said, once you’ve made up your mind on buying the car of your dreams, the rest is easy. Well, relatively speaking, that is.

The first thing you do, even before you apply for a car loan, is make an application to know your current credit score. People tend to approach the financer directly, thereby squandering away any advantage of negotiating a better deal based on their credit score.

When it comes to buying new cars, the purchase price is supreme – not the EMI (equated monthly instalment). Starting off with the EMI figure, allows the lender to load it up with their own charges and other add-ons. Don’t let the lender dictate terms. You are the one buying a car, the one giving them the business, so it is only fair that you get the best deal to your advantage.

The key to understanding car financing is to remember that cash is king. When negotiating on the rates and other aspects of the loan, always ask for a discount straight up, not a reduced EMI, nor other freebies. The latter are always priced higher at dealerships and can be purchased for a lower price from the market. On the other hand, once the price of the new cars is fixed, it cannot be lowered or renegotiated.

Another aspect of the car loan process is including the cost of accessories into the lending amount. They are always priced higher when purchased from the dealer. Also, by its very nature, financing leads to long term costs. So you end up paying more, two times over.

Knowledge is king when it comes to making a purchase and when you know about these charges before applying for a car loan, you give yourself an advantage over the average car buyer. So go on, arm yourself. It is your hard earned money after-all and you deserve nothing but the very best.

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