Today, many financial institutions across India offer commercial vehicle loans at competitive interest rates. However, with so many options readily available, it can often be confusing to identify the perfect loan for your needs. To make the right choice and get the best loan terms, you need to keep certain dos and don’ts in mind.
Do fetch your credit report before applying for a vehicle loan
Most lenders evaluate loan applications based on parameters like, credit score and income source. However, if your income is high, but your credit score is low, your loan application might get rejected. Borrowers having a good credit history & score have greater chances of loan sanctioning. Therefore, it is best to have a good idea about your credit score before applying for a commercial vehicle loan. If your credit score is low, you can take proactive steps to give it a boost such as paying credit card bills and pending debts. Having said that, a few reputed NBFCs do not consider credit scores. All in all, it is good to have an idea of it & research well before applying for a vehicle loan.
Do not overestimate your EMI affordability
Overestimating your EMI or Equated Monthly Installments affordability may increase the risk of EMI defaults owing to income disruptions and other financial concerns. Loan repayment defaults can incur hefty penalties. It would also adversely impact your credit score and hence, future loan and credit card eligibility.
Hence, before applying for a vehicle loan, carefully calculate your EMI affordability. It can be done by deducting your business expenses, insurance premiums, existing and mandatory monthly expenses, monthly investments, and more. After determining your EMI affordability, you can use a vehicle loan EMI calculator to compare multiple loan options to zero on the ideal one.
Do get your documents in order
Documents verification is an important step towards loan approval. Documents like business registration, proof of income, address, age, and employment are required. Hence, you must have the right documentation in place before applying for the loan. It would help in streamlining the overall loan approval process and making it quick.
The abovementioned dos and don’ts may seem simple but can play an instrumental role in enabling you to get the ideal loan for a car purchase.
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