Click it and Unblock the Notifications
4 Tips To Pay Off Your Car Loans Easily – Understanding The System
The joy of buying a new car comes to an end for most consumers as EMIs commence. As such, here are some tips to maximise the benefits and pay off your car loans easily.
Maximise Down Payment
Try to maximise your down payment especially if you are a salaried professional. Making a sizeable down payment ensures lower EMI. and it will have less impact on your monthly budget. Furthermore, It is also advised to opt for a shorter loan term as it can have a significant impact on the total interest.
Make Additional EMI Payments
If you are a salaried professional, make sure you pay additional amount with EMIs. For example, paying Rs 1000 extra for every EMI will ensure that you are paying Rs 12,000 extra towards your EMI. This will help pay off your loans sooner and the overall payable interest becomes less.
Choose An Affordable Car
Forget your neighbour's car, instead, choose a car that you can afford even if you are eligible for a higher loan amount. This is a common mistake made by many consumers in India and they only realise their mistake once EMIs commence for the car loan.
Pre-Payment
As mentioned, if you are a salaried professional, it is better to pre-pay the loan and close it as soon as possible. However, for business people under the 30 per cent income bracket, we recommend not to pre-pay the car loan as they can claim Interest Expense and Depreciation Value to reduce tax.
That being said, if you have an electric vehicle, there are some tax benefits that ensure that your Effective Interest Rate stays below 6 per cent. So, instead of pre-paying the car loan, EV users can invest this amount for higher returns in the future.
Thoughts About Car Loans
Car loans can be very lucrative and it is easy to make an error in this process that can burden you with EMIs. However, following the above tips can help you reduce this burden to some extent and have better and more stable financial management.
Continue with Google