And when do you take a loan to buy that car of your dreams? Make sure you manage the debt efficiently. Keep reading to know how.
Getting a car isn’t too difficult. However, trying to repay the same may be troubling if you are not careful. Taking a loan is a big step and should be dealt with responsibly so that it may not 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.
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Below are a few smart strategies that can help you handle an auto loan efficiently without straining your pocket.
- Use Preapproved Offer to Your Advantage
Consider taking the pre-approved loan offer from the bank even before you walk into a showroom. That way, you have two advantages. First, getting the car home will be much quicker because the loan is already approved. Second, you’ll be less likely to spend more than your budget. ICICI Bank offers Car Loan to existing customers with reduced documentation and exclusive benefits
- Large Down Payment Concession
Even though you can get the loan on 100% of the car’s value, however, paying a down payment can help you reduce your loan burden. A sizeable down payment reduces your principal amount,
as it heightens your chances of acquiring a loan and reduces the overall interest outgo on the loan.
- Appropriate Loan Tenure
The period of the car loan is generally 7 years. The suitable tenure to be chosen is very important to manage it accordingly. The tenure you would choose for your car loan may also alter the interest rate for your car loan. Make sure that the tenure you choose will suit your financial health.
- Utilize EMI Calculator
Financing a car means paying back the borrowed amount. So, it’s pretty crucial to calculate how much you will be required to pay each month in terms of instalments before signing on that dotted line.
Use a car EMI calculator to determine the likely repayments in terms of the amount borrowed, period, and rate of interest. Just make sure that it is something you can easily afford to pay. According to the thumb rule, your total EMIs for a month should not exceed 50% of your income for that month.
- Be selective when you choose an EMI date.
After the bank sanctions your car loan, it gives you a choice to select a date for your EMI. This is the date that the bank will withdraw the particular amount from your bank account. You can just pick a date that corresponds to your salary date or any major paying date in a month. Ideally, it should be a couple of days after when you are scheduled to receive the salary or the biggest payment in your account.
Now that you are all geared up with some smart tips to handle your loan, what are you waiting for? Go ahead and get hold of that car loan and gear up to shift into high gear while the engine purrs!
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