A loan is when an individual or an organization, is lending money to another individual for purchasing a movable or immovable property. For getting a loan, an individual has to submit all the necessary documents to the organization. Including this, loan will be availed to an individual depending upon his or her ‘Credit Score’. Once the loan has been credited to the individual, he has to repay the debt with the certain amount of interest, for a specific period of time. Loan can be availed for different reasons like Education, Personal, Housing, etc.
A loan applied in an organization for purchasing a car, is called as the car loan. You can avail car loan with the specific interest rate and repay it with the interest after few years. However, the initial payment has to be made by the individual and the loan can be received from the bank or any other organization. The loan can be pre-approved through the bank or the car dealer himself can arrange for loan.
In this article, we are going to see about the step by step procedure for applying a car loan.
Step by Step Procedure for Applying a Car Loan:
- Step 1: Initially, you have to check your credit score, since this factor decides if you are receiving a loan or not. This is also considered as one of most factor, when we are thinking about applying for loan. If your Credit score is high, then you will be able to receive Car loan at low interest rate, which in turn saves you money. You can also check this Credit score online for free, once a year.
- Step 2: After confirming your Credit Score, you have to decide the amount you will be able to spend without straining your budget. After confirming the amount, you can decide on how much you are willing to spend and look for a car in that budget. You can also decide the tenure period, which is for how many years your are willing to pay your due. You can repay your for a maximum of 7 year time.
- Step 3: After deciding on the spending limit and the time period, you can get a pre-approval from the bank, in which you hold an account. If not, you can also inform your car dealer, from whom you are purchasing your vehicle. He will be able to help you along the process and also can arrange for loan, from a bank. The amount will be fixed by the bank, if you are capable of paying more in advance, you can pay with cash and receive loan for the outstanding amount.
- Step 4: The final step is to finalize your vehicle. Once you get pre-approval from your bank or any other organization, you need to finalize your vehicle depending upon the amount you will be receiving as a loan. You should also keep in mind that the initial payment done should be made by you, through cash or debit card.
Nowadays, the procedure for applying and receiving a car loan has been simplified. However, the rate of interest may vary for each and every bank. The tenure period can be decided by you.