Smart Tips to Manage a Car Loan Efficiently
November 11, 2021
Taking out a loan to buy the car you’ve always dreamed about? Make sure you manage the debt efficiently. Keep reading to know-how.
While it is reasonably easy to acquire a car loan, paying off the same can sometimes cause you trouble if you’re not careful. Taking a loan is a big step and must be dealt with responsibly, or it could land you into monetary debt. Remember, everything from the amount borrowed, to the tenure and the interest rate can affect the size of your monthly instalments. It's thus important to get acquainted with the nitty-gritty of how the mechanism works.
Listed below are a few smart strategies that can help you handle an auto loan efficiently without straining your pocket.
1. Use Preapproved Offer to Your Advantage
Consider taking a preapproved loan offer from the bank before you even walk into a showroom. This will have two benefits. Firstly, getting a car home will be much quicker as the loan is already approved. Secondly, you are more likely to stick to your budget. ICICI Bank offers Car Loan to existing customers with reduced documentation and exclusive benefits
2. Offer Large Down Payment
While you can get the loan on 100% of the car's value, paying a down payment can help you decrease your loan burden. A substantial down payment lowers your principal amount,
which increases your chances of acquiring a loan and decreases the overall interest outgo on loan.
3. Right Loan Duration
Car loans are usually available for 7 years tenure. Choosing the right tenure is essential to manage it efficiently. The car loan interest rate offered to you might also change depending on the tenure you choose. Make sure the tenure you choose is apt based on your financial health.
4. Use EMI Calculator
Financing a car means repayment of the borrowed amount. Hence, it's crucial to estimate the monthly instalments payable before signing on the dotted line. Use a car EMI calculator to compute the probable repayments based on the amount, loan tenure, and interest rate. Make sure the EMI is something you can afford comfortably. As a thumb rule, your cumulative EMIs in a month should not be more than 50% of your monthly income.
5. Choose Your EMI Date Wisely
When the bank sanctions a car loan, you are usually given a choice to choose an EMI date. This is the date when the bank will deduct the specified amount from your bank account. Choose a date that matches your salary date or other important payment dates in a month. Ideally, it should be a few days after you are set to receive the salary or the largest payment in your account.
Now that you are armed with some smart tips to manage the loan, what are you waiting for? Go ahead and obtain the car loan and get ready to shift gears and the engine purring!