Things You Look for When Applying for a Car Loan

Dec 9, 2018 by Raheil Inaim

Taking out a car loan is a process most Jordanians will go through in their lifetime. Many often stress about the process and find that they are left in financial strain after receiving their loans. While this is true for most, it does not have to be true for your case. If you do your homework, and research the right car loan for you, you will find yourself making payment each month with ease. Below, AmwalCom provides you with the things you should consider when applying for a car loan.

Affordability in Your Situation

Even though taking out any loan should be based on proper calculation of your ability to pay off that loan, odds are most Jordanians have not done the math yet. You should really sit down with a proper loan calculator and see if you can afford the loan you are looking for. Think about how much you can afford to pay month-to-month and in total. If taking out a car loan is a stretch for your finances, find a better option. There are a number of car loan options with or without salary transfers including Islamic financing (shari’a compliant) offers. Compare car loan options in Jordan here.

Flexibility with Prepayment

Flexibility in a car loan, or any loan in fact, can be life altering for your financial situation. Flexibility here means your ability to prepay the remainder of your loan without a penalty. Now, many lenders will only allow you to prepay the remaining amount with a hefty fine due to the interest they will be losing when you prepay. If your financial plan has you saving enough money to prepay a loan amount before the loan term is over, then you should definitely look at finding a car loan with no prepayment penalty.

Look at the Big Picture

When you take out an auto or car loan, you should be thinking about your financial status the whole term of the loan, and not just in the present. For example, if you find a loan with a low down payment, do not immediately think it is a good idea. A low down payment may mean a very high interest rate, which will mean paying thousands more in the future. Also think about low monthly payments vs a low annual percentage rate. Be sure to weigh out the pros and cons of the loan while keeping in mind the whole term of the loan.

Look for a Fixed Rate!

This is a super important little hack whenever you are taking out any loan. You need to find a loan with a fixed interest rate. Many disregard this point and choose a loan with a low interest rate that is not fixed. Keep in mind that when a rate is not fixed, it has the potential to skyrocket. It is better to have a rate that you can afford for sure than to gamble and leave it unfixed to either go up or down.

Look Out for Service Fees

How service fees are calculated can make a big difference in what you end up paying in the future. For example, some lenders take out a percentage of the loan amount as a service fee for processing the loan, while others take a fixed amount. Make sure you understand exactly how a service fee is calculated and how much you will end up paying for it before you sign anything.

Yes, learning all these car loan terms can be a bit frustrating in the beginning. Keep in mind that the more you know about car loans, the easier it will be for you to get a good deal. Educate yourself thoroughly before applying for a car loan and make sure you find one that works best for you with AmwalCom.