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Buying a brand-new car is such an exciting time! A coming together of dreams, ambitions and needs. In all the excitement, we sometimes forget to think about managing the loan repayment in an optimal manner.
Planning the loan repayment well is just as important as choosing the best available loan deal.
Consider opting for a bigger down payment:
This is something that you can keep in mind, while availing any kind of loan. However, since a car loan will not be as higher as a home loan, you could probably manage to opt for a down payment of a larger magnitude.
Choose your car wisely:
Again, here, bite only as much as you can chew. Your dream car could be a Maserati, but what is it that you have a financial appetite for without messing up your saving portfolio? Keep all your financial obligations, other debts, EMIs, and probable expenses in mind before choosing a car. If you can manage to buy your dream car, go for it! If not, think about a more feasible alternative.
Look at a shorter repayment tenure:
When you opt for a shorter loan repayment tenure, the rate of interest that you have to pay, reduces, therefore, do think about going for a short-period loan. This will however mean that your monthly EMIs would be on the higher side. But, in that case you will not have to pay a higher interest rate on your loan. Thus, you will get to save a lot of money.
Be definite about applying for a car loan:
If you already have a home loan to clear off and some other loan on as well, consider putting off buying a car using a car loan, until you clear off one of your multiple loans. If not, consider every expense, your savings goals, and have some emergency funds in place, before planning for your car loan. This way, you will make an informed decision and not take on uncalled-for burdens.
Never miss your EMI payments:
Be a little crunched on cash for a month, when the going gets tough, but absolutely avoid missing your car loan EMI. If you miss out on a few instalments at a go, your bank might even declare you a defaulter. This could affect your credit history, and make it difficult for you to get your future loan applications approved.
Be a planning ace:
Draw out excel sheets. Budget all your monthly expenses. Plan your monthly expenses and budgets, and stick to the plan. This is the best way of managing to pay your EMIs on time and to also be at a good place, financially.
Go for refinancing, if you can:
Refinancing a loan means using the proceeds of a new loan to pay off an existing loan. These loans are usually of the same amount. How will this help, you ask? Well if you are getting to switch from a fixed rate of interest to an adjustable-rate loan, you are benefitting here. Refinancing could also reduce the total tenure of your car loan.
Do you need debt consolidation maybe?
If you are in the process of clearing off multiple debts, over and above your car loan, you could consider debt consolidation. What is this, you ask? In debt consolidation, you can apply for a loan of a larger magnitude and pay off all your multiple loans. This way, you do not have multiple loan repayments niggling your mind. You can focus on repaying just a single consolidated loan, plan for it well, increase your loan tenure if you need to, and repay it off in time.
Reach out to the bank, if you end up defaulting your repayment:
If you happen to miss paying any of your car loan EMIs due to some unforeseen financial situations, you need not worry yourself to misery. Banks wouldn’t declare you as a defaulter unless you miss more than a few of your EMIs. However, if you know that you won’t be able to pay the upcoming instalment either, talk to your bank. Explain your situation to them carefully, and see if you could maybe renegotiate your loan terms, although this is rare. Alternately, you can reach out to professionals who could advise you on how to go about such a situation.
Now that you are equipped with all these tips, you can zoom through your car loan peacefully, like an ace driver. Good luck with buying your dream car and repaying its loan without any glitches at all!