10 Useful tips to manage your car loan emi
Does your vehicle drive you up the wall regarding its EMIs? Let’s try to find a way to make this drive a smooth one. Vehicles have long since shed their luxury label and become a necessity. Financial planning before purchasing a car is critical for ensuring that the loan is properly acquired, EMIs are scheduled, and repayments are made over the loan’s duration. This will avoid hassles and debt. Digitalisation offers numerous options for managing your car loan. One such application is the car loan EMI calculator, which will guide you at the pre-purchase stage. While all this sounds easy on paper, let’s see how you can tackle your car loan EMIs.
Plan your purchase basis your lifestyle
The prospect of owning a car can be both exciting and frightening. A fair assessment of your finances, savings, and spending pattern is a must. You can put together a list of all your loan commitments, and how it is impacting your monthly income. This will give you a sense of how much residual income is left for you to spend on the EMI of your dream car.
Set aside a Budget
Setting aside the money you are willing to allocate for this big buy helps you plan for the future. After deciding your monthly EMI commitment, you also need to decide the duration of this car loan. Here, the car loan EMI calculator assists you in determining your monthly payouts. This tool calculates an approximate EMI sum at current interest rates as well as different tenure options based on your allocated budget and car preference. The interest rate and the term of the loan are key factors that will impact your car loan journey.
Research Lender options
The Indian car market is booming today, with retailers offering a lot of interesting offers along with the vehicle, from easy repayment options to additional car accessories. The buyer stands to gain with multiple incentives being offered. Spend adequate time researching loans offered by several banks and NBFCs. To assist you in deciding the source of your loan, compare several offers and schemes after considering all value-adds. You can undertake this research easily through the online medium, and browse through relevant websites; most of these financial institutions have a car loan EMI calculator on their official websites to help speed up your decision.
Choice of EMI scheme
The EMI option you choose is directly proportional to the rate of interest and the duration of the loan. This means that a higher monthly EMI means a quicker closure of the loan, on the other hand, a longer tenure would mean paying more interest. Choose wisely, a shorter duration can help close the debt cycle faster as compared to a longer tenure.
Pre-planning the loan schedule
With the help of the car loan EMI calculator, you can decide your monthly payouts, and the spread of the loan duration, which helps you adjust the loan amount conveniently. The car loan EMI calculator helps you decide whether it is in your best interest to opt for a down payment along with applying for the car loan. Such planning with a car EMI calculator takes off your future worries without impacting your financial goals negatively.
Timely payments
You must honour your monthly payouts and try your best to avoid any defaults. This not only attracts a penalty but also impacts your creditworthiness. Multiple non-payments against your name will affect your future loan applications. Hence, always plan ahead and avoid defaulting on your EMI schedule. With a cellphone that is always handy, it is easy to set up reminders so as not to miss the EMI date.
Tax Benefits
You must take note that if you have taken the car loan for business purposes, you can claim a tax deduction against the interest paid. This will bring down your taxable income, thus resulting in savings. Furthermore, you can claim benefits on the depreciation of the car and other maintenance expenditures. To successfully make such claims, the car should be used for the purpose of running a business and registered in your name or the name of your enterprise.
Pre-payment options
When looking for a lender, always look for sources that allow you to make part payments on your car loan. This may be subject to some charges, find out what the cost of such pre-payments is. Additionally, you can also foreclose your loan before the tenure is over, this too will attract some charges from the loan provider. Make a note of all such expenses while making a decision on the car loan.
Refinancing your car loan
Sometimes you may be in a situation where you are unable to pay the loan as per your current agreement with your lender or lending institution. Worry not; you have the option to rework your loan terms to either rework the interest rate or extend the tenure, as may be the case. With the help of your lender, you can modify the loan agreement appropriately once you meet the eligibility criteria and get better commercial terms on the loan.
Consolidating your loans
Living in a day and age where we work tirelessly to fulfil most of our dreams in one lifetime, we do end up taking on several loans. In this scenario, keeping track of the EMI schedule of different loans such as personal, education, credit card, etc. becomes challenging. One way to efficiently manage your finances is to take out one major loan to pay off all the other pending loans. This loan may come with a lower interest rate and favourable payoff terms. This helps reduce your financial burden considerably.
Parting words
Last but not the least, any loan is a debt until it is paid off, it is always in your best interest to try and minimize your expenses, make informed choices, and plan judiciously to avoid getting into a debt trap. To know more about car EMI calculators, loan applications, and managing your finances better, log on to https://www.piramalfinance.com.