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The decision of buying a car is indeed exciting for many people. You have done all your research about the make, the specifications, model, color and price. An automobile serves many purposes other than just taking you from one place to another. It helps you travel effortlessly; cut down on extra expenses and also boosts your social status. However, not all of us have the capital to purchase a car out rightly. Spending all the savings on a car is not a smart decision. That is where car loans can help you fulfill your dreams of owning a car in a hassle-free manner.
How to Qualify for Car Loans?
If you are new to the concept of car loans you must be wondering how to determine whether you are eligible to get a loan at low-interest rates. Here is a basic criterion based on which car loans are taken easily.
- The applicant for the car loan must be a resident of the state.
- The age limit of the applicant must be at least 18 years old.
- Credit history must be clean. The financial lending institution will investigate how much existing debt the applicant possesses.
- The kind of down payment you are willing to make.
- The repayment terms for the car loan.
- The type of car you want to buy.
What Documents do you need for Car Loans?
Once you have fulfilled the basic eligibility criteria the next phase comes in the picture and that is the documentation requirement. Following is a list of documents you need to submit for making sure that the car loan process moves smoothly.
- Proof of age: Because you need to be at least 18 years of age, you need to provide proof of age documents like driving license, passport, or any other government document that lists your date of birth.
- Proof of identity: You need to provide a proof of identity, which can again be a driving license, passport or any other government-issued identity card.
- Proof of address: The present address at which you reside.
- Proof of income: Pay slips, bank statements, and tax returns are documents which are usually accepted as proof of income.
- Verification of Signature: Your signature is verified when you apply for a car loan.
- Photographs: Passport sized photos of the application.
Tips for Negotiating Car Loans
During the process for applying for car loans, the showroom personnel will try to sell you additional accessories as well. However, if you say “yes” to everything your overall expenditure can go beyond your budget. To deal with these situations you need to learn how to negotiate:
- Do price negotiations on car price: Although this sounds simple, in reality, it is extremely challenging. The aim of the salesperson will be to figure out how much you are willing to pay monthly and based on that offer you the car. This process will make you end up paying a lot more and hence negotiate on the price of the care and not on the monthly payment competencies.
- A short loan term is the best one: The idea of smaller monthly payments is used as a promotional tool by dealers to attract more car buyers. However, they use very long time period in order to do so. Do not forget that the value of a car depreciates with time. Hence the interest rate you will pay for long years is going to cost you more. Keep the loan terms as short as you can possibly less than four years.
- No extras to be added: When buying a car, the salesperson will pitch every option they have such a sense of warranties, fabric or paint protection, etc. Skip everything if you want to keep it simple.
These days car loans can be applied even online. Before you choose the lender, compare the rates from different sources and then figure out which one works best for you.