How to Get a Car Loan
You’ve decided on what car to buy. Now it’s time to shop for a car loan. Here’s the step-by-step guide to getting an auto loan:
Step 1: Shop around. Check out the Web sites of commercial and savings banks, especially those with good rates. Check the eligibility requirements, such as age and income, and the terms, including the rate, loan period, and down payment.
Step 2: Fill out and send the application form. You can either download the form from the Web site or fill it out online, if that function is available. You can also drop by the branch for a paper form. When you’re done, send the form by fax or through the branch. Some banks can give pre-approval within a few hours subject to submission of required documents while others require you first to submit these documents along with your application.
Step 3: Compile required documents. If you are employed, prepare a copy of your certificate of employment, latest pay slips, or Income Tax Return (ITR). If you are self-employed, there’s a little more work involved. Prepare your business registration papers, articles of incorporation and secretary’s certificate (if applicable), latest financial statements, and other documents (they differ per bank). You also need to give copies of valid IDs.
Step 4: Make the down payment. Once the loan is approved, you sign the loan documents and make the down payment. You also have to pay the chattel mortgage fee and other charges, including the premium for the comprehensive auto insurance policy.
Step 5: Decide how to pay. Your bank will let you pay either through post-dated checks (PDCs) or auto-debit arrangement (which means you have to open an account with them).