Written by Roshani Zaidi
If you are planning to buy a car and apply for an auto loan, it is your right to know all you can before you approach a bank for Car Financing.
Even when you go shopping you may want to compare products before buying them. It is essential that one evaluate various banks and compare rates if it is a big financial decision like Car Loan.
You need to find out which bank offers Car Financing in your city. A lot of Banks only offer limited financial services across the country and products like Credit Card, Auto Loan and Home Finance are dealt in a few commercial hubs or cities only. There are also dynamics like, if a bank offers Shariah Compliant Islamic Banking Option or Conventional Banking Products only.
Price of the product is the most important factor for almost every consumer. Before you sign the dotted line you must be aware of the following charges.
- Processing Charges – This does not have any impact on the monthly installment as it is usually a onetime fee that covers the cost of processing the application. You should still check and make sure you choose a bank that does not cost too much upfront.
- Interest Rates – This is the most important part of the price that the customer pays throughout the period of the loan. Interest rate, also called mark up, varies periodically in most cases based on market rate or in some cases may be fixed for the duration of the loan.
- Insurance Rates – All cars that are financed by banks are required to be insured by some reputed insurance company. Some banks also require that a tracker be installed in the car along with insurance. You may also want to opt for tracker as a security measure if your car is at high theft risk.
- Payment Flexibility – You want a car now but don’t want to use all your money or the car your heart desires may be a little more expensive than you can afford. Applying for an Auto loan is a great solution in such cases, but what if you get a good bonus and want to pay off your loan early or if your business is doing well and you want to make payment of multiple installments together. These are reasons why you should look for Early Payment and Balloon Payment Options. Banks usually charge some penalty or fee in such cases.
- Down Payment – Down payment is your upfront contribution of the price of the car. The more equity you put upfront the lower will be your monthly installment. Similarly, if you pay lower down payment your monthly installments will increase.
Lastly, it is also important that you check the documentation requirement and qualification criteria. Checking this beforehand will help you prepare for a smooth and quick application process. Also, you can choose a bank with eligibility requirement that suits you best.
Auto Loans are usually a commitment of 1-7 years. You would want to look for a bank that offers a variety of services that you can avail during the period of the loan. There are many ways that you can get all the information you need before making the right decision.
- call up various Bank call centers
- visit branches
- call someone you know who works in a bank
- visit different banks online
All of the above, while possible, are lengthy and confusing options as you need to get information from various sources, compile them, and compare the many factors. Great news is that we have websites like www.comparebanks.com.pk that compares multiple financial products including Auto Loan offered by different banks present in Pakistan. CompareBanks gives instant results based on interest rates and bank’s presence in your city. You can choose the bank you like after comparing installments, upfront fee, bank features, eligibility criteria and documentation. You have the right to make the most informed decision from the comfort of your home. The Bank you choose will contact you.