How to manage your car loan EMI
You may be looking for a variety of car loan management tips and tricks India, particularly if you are grappling with high EMI payments. Naturally, in this scenario, a question will come to your mind- How can I reduce my car loan EMI? Car ownership has now become something of a necessity, particularly for India’s working population which has to commute longer distances each day along with covering multiple points of leisure, shopping, recreation, social gatherings, emergencies and the like. Growing disposable incomes and multiple options in terms of car loans have led to exponentially rising car sales in the country over the last decade. However, successfully and smoothly managing your car loan is a highly necessary job that you should be mindful of.
Make sure that you are repaying your loan in a timely manner since any defaults will impact the credit score negatively. Try and make a higher down payment on a car so that your overall loan outgo is on the lower side. This will naturally lower your debt considerably along with the overall interest that you are paying. Your monthly EMIs will be reduced substantially as a result.
Ways to properly manage car loan EMIs
When it comes to learning how to lower car loan payments, here are some strategies that you can certainly apply.
- Map all your debts– Before applying for your car loan, the first thing that you should do is careful mapping of all your debts. Make sure that debt is repaid on time for existing loans and list down all the loans/debt that you have along with the total amount that is due each month through EMIs. This should be done to work out whether the total EMI amount (inclusive of the expected car loan EMI) does not surpass 50% of your net monthly income. For getting an idea about the EMI payable for a particular car loan amount, you can always use a car loan EMI calculator.
- Compare and choose car loan offers- There are various lenders out there and you may get attractive extra offers/freebies on car loans as well. Conduct your market research thoroughly and extensively for choosing the best possible loan offer as per your specific requirements. This is one of the useful car loan tips and tricks in India; Through online searches, comparisons of home loan offers and interest rates, you can finally zero in on the loan scheme which has the highest benefits for you. Finding a low-interest rate will naturally reduce your expected car loan EMI.
- Choose your loan tenure wisely- A higher interest rate, as mentioned, will lead to a considerably higher car loan EMI. Hence, you should perform extensive market searches and find loans with lower rates of interest and shorter tenures for repayment. Keep in mind that you may scale up the loan tenure for lowering your monthly EMI. However, this will lead to paying higher interest overall. Choose the loan tenure wisely.
- Work out EMIs in advance- As mentioned earlier, along with scaling up your chances for getting your loan approved, work out the monthly EMIs before applying. This is done through car loan EMI calculators that are readily available online. They will help you understand the amount payable once you choose factors like the tenure, the loan amount and interest rate. You can hence choose to apply for a loan amount that you can afford in terms of the monthly repayment.
- Prepayment matters immensely- Various NBFCs and banks offer prepayment options for car loans for customer benefits. If you are seeing influxes of cash suddenly or windfalls or steady growth in income, you can use the same for prepaying a major chunk of your car loan as well. Prepaying loans will help you lower the car loan tenure along with the interest amount that is payable on the loan. However, remember that prepayment charges are often imposed by various banks and NBFCs and you should make a note of this.
- Repay EMIs in a timely manner- Late fees are chargeable if you do not pay your loans in a timely manner every month. Alongside, defaulting on payment of monthly EMIs will lead to a poor credit score as well. This may negatively impact you whenever you apply for a loan in the near future. Hence, do not delay your EMI payments or miss out on the same.
- Plan repayments carefully if you have multiple loans- If you already have one existing loan or multiple loans, you should take greater care while applying for your car loan or any other debt for that matter. When you take on an additional loan over and above existing debt, you should plan out the repayment strategy for all the loans in order to lower chances of defaults. Paying off loans with higher rates of interest should be a priority while focusing more on loans which come with added benefits and are secured.
- Implement lifestyle changes whenever needed- Loans are key financial advantages and make sure that outstanding debt is repaid in a timely manner since this is your responsibility. Customers can always implement a few lifestyle changes whenever you have to lower your monthly outgo including reducing whatever is in your control. This will free up more money every month and add greatly to your financial comfort. Although keep in mind not to stop investing in proper investment vehicles if you are already into it, as it will help you to save money judiciously for the future. It’s just that now that you have an ongoing EMI and you have to manage your expenditures more efficiently.
You should definitely follow the above-mentioned car loan tips and tricks while choosing your car loan and make sure that you land the best deal in terms of the interest rate and tenure. Make sure you repay loans in a timely manner without defaulting on or missing EMIs and take on debt which you can comfortably afford.