Finding the right car loan can be a daunting task. There are so many factors to consider, such as interest rates, loan terms, and fees. Hence, it is crucial to do your research and compare offers from various lenders before you commit to anything.
Here are some key factors that you need to look into before you take out a loan:
- The amount you can afford to borrow: You’ll need to decide how much you can afford to borrow because you need to repay it over time. Keep in mind that your monthly payment will include not only the interest but also the principal amount of the loan.
- The loan term: The loan term is the length of time you’ll have to repay the loan. Longer loan terms will have lower monthly payments, but you’ll pay more interest over the life of the loan.
- The fees: There are a number of fees associated with car loans, such as administration fees, pre-payment fees, postponement fees, late payment fees, and other charges. Be sure to factor these fees into your decision.
Pros:
There are a number of pros to getting a car loan.
- Improve credit history: It can help you build your credit history. When you make your monthly payments on time, it shows lenders that you’re a reliable borrower. This can make it easier to get approved for other types of loans in the future, such as a mortgage or a business loan.
- Own a car: A car loan can help you get the car you want now, even if you don’t have the cash on hand. This can be a big advantage if you need a car for work or for your family.
- Multiple options and flexible terms: Car loans typically have flexible terms and various options available, enabling you to opt for the one you are comfortable with.
Cons:
Of course, there are also some cons to car loans.
- Recurring expense that can be expensive: You’ll have to pay interest on the loan, which can add up over time and become expensive.
- Damage credit score: you’ll be required to make monthly payments, even if you can’t afford them. If you default on your payment, you could damage your credit score and even incur late payment fees.
- Can be a long-term commitment: If you take out a 6-year loan, you’ll be making payments for 6 years. This means that you’ll have less money available for other things, such as saving for retirement or paying off other debt, making it a long-term commitment and holding you off your other plans.
Requirements:
Eligibility criteria for car loans vary from bank to bank. All banks, however, have a requirement that the applicant must be at least 21 years old and earn the required minimum salary.
Hidden fees:
It is necessary to read the fine print before you sign any documents in order to be aware of any hidden charges that may apply. The main fee attached to taking out a car loan interest, however there are various other fees that apply:
- Administration fee
- Late payment fee
- Pre-payment penalty
- Postponement fee
- Release Certificate fee
- Insurance fee
Which banks in Bahrain provide car loans?
- Bahrain Islamic Bank
- Al Baraka Bank
- National Bank of Bahrain
- Ahli United Bank
- Khaleeji Commercial Bank
- Kuwait Finance House
- Al Salam Bank
- Bank of Bahrain and Kuwait
- Bahrain Credit
- HSBC
- State Bank of India
- National Bank of Kuwait
Can I lease a car?
In addition to car loans, you may also want to consider leasing a car. Leasing is a different type of financing option that allows you to drive a new car for a set period of time. At the end of the lease term, you have the option to buy the car, return it, or lease a new one.
One of the biggest advantages of leasing is that you don’t have to worry about depreciation. When you lease a car, you’re only paying for the depreciation that occurs during the lease period. This can save you a lot of money, especially if you’re buying a new car.
Another advantage of leasing is that you can get a new car every few years. This can be a great option if you like to have the latest and greatest car. However, there are also some disadvantages to leasing. First, you’ll still have to make monthly payments. Second, you’ll be limited in the number of miles you can drive each year. If you go over your mileage allowance, you’ll be charged for each additional mile. Third, you won’t own the car at the end of the lease. You’ll have to either return the car or buy it. If you buy it, you’ll likely have to pay a balloon payment, which is a large sum of money.
Daleel takeaways:
- Before applying for a car loan, make sure you meet all of the requirements.
- Make sure you are aware of the various charges attached to a car loan before taking it
- Whether you decide to get a car loan or lease a car, it’s important to do your research and compare rates before you make a decision.
