You have completed your education from one of the premier institutes in the country and are now ready to commence your career. With the kind of company and profile you have managed to procure, you need to have your own car. The question is that where will you find the money to fund this expense considering that you have just finished studying and are taking up your very first job.
Some people may be able to receive financial assistance from their parents. However, the fact is most individuals do not have the luxury of being able to receive the necessary money to buy the car from parents. So the question is how to get a loan to purchase the car?
Education loans
Higher studies mean education loans that need to be repaid from your earnings. These often amount to huge sums and servicing these can take up a huge chunk of your monthly disposable income. Add the other monthly expenses, such as travel, food, and living and you realize that you are left with very little money that can actually be used towards servicing car loans.
No credit history
Most people who have just started their first jobs have nothing to show on their credit reports, which is another challenge to be overcome. This can be achieved by procuring a low limit credit card and paying the bills on time for a period of at least six months before applying for the loan. This will significantly increase the probability of being able to procure approval and buy your first car.
Higher interest rate
First-time applicants are perceived as high-risk profiles. The primary reasons for this are their lack of a history showing financial stability and no credit score. This means that even if you are able to qualify for car loans, you will need to pay higher interest rates. A higher rate can make it financially difficult to service the debt obligation, which renders it almost impossible for you to buy your car.
Job challenges
The fact is that you are new to the corporate world having just begun your first job. There is no guarantee you will enjoy working in the organization. Additionally, you may realize after a few months that you do not really enjoy the profile. Having taken on the additional burden of servicing a loan on your car, you will need to continue working in the same organization in order to repay it.
Investing and saving
When you have a high profile job, you will need to maintain a certain standard of living, which is a huge expenditure. Additionally, travel and food will claim a significant amount of your monthly income. While all these add to your expenses, there is constant pressure to save and invest some portion of the money to meet future expenses as your responsibilities continue increasing. Seeking health and life insurance will be necessary. This leaves you with very little disposable income that can be used to procure a loan on your dream car.
The above are some of the most common challenges faced by individuals who want to acquire car loans. Making a well-thought out decision before the purchase and then being responsible in the repayment can help you achieve financial discipline as well as build your credit history for future loan applications.
Know more about car loans and their interest rates at http://www.mahindrafinance.com/car-loans.aspx.
