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Things To Keep In Mind While Applying For A Car Loan



It often happens that due to enthusiasm and excitement you end up taking a car loan which later becomes difficult to repay. You should bear in mind that if you are unable to repay your car loan or you miss a few installments, it will negatively impact your credit score. Hence you should keep some things in mind while opting for car loans.

Check your credit reports

This is the first thing that you should do, and you should get your credit reports from all the three credit agencies. This is because you are not aware which one your prospective lending organization is going to use. You should check your credit score because this factor will be used to decide the rate of interest.

Shop around

It is advisable to shop around to get the best deal on a car loan. According to the Center for Responsible Lending, 80% of car buyers make their loan decision when they are at the dealership. It could be due to the convenience or the attractive advertisements offering low-interest rates. Always bear in mind that you can get the lowest interest rates only if you have a good credit score. It is a good idea to start your search with community banks and credit unions as they offer the best rates of interest.

Make sure that you consider your monthly income and expenditure and the EMIs that you will have to pay. Do not end up buying a costly car and then not be able to pay the monthly EMIs.