Top Tips to Consider For Faster Repayment of Your Car Loan
You have finally purchased your dream car, and it is now time to start paying the equated monthly installments (EMIs) on the loan. Vehicle loans have made it easier to buy your desired car even when you do not have the entire amount needed for the purchase.
Financial institutions offer flexible repayment tenure, ensuring you do not face any liquidity crisis to service the loan. However, after a couple of years, you may not want to prolong the repayment and pay the loan completely.
Here are four tips that can help you repay the car loan faster:
Do partial prepayment
You can use your investment gains or annual bonus amount to repay some portion of the outstanding loan. This will reduce the principal, which, in turn, lowers your interest burden. So, you can save a significant sum in the long run. However, before you choose this option, check with your lender about any applicable prepayment penalty. Calculate the effective savings after paying the penalty to make an informed decision.
Cut down your expenses
Prepare a monthly budget and stick to it so that your expenditure does not exceed your income, which can increase financial distress. Before you apply for car loan, it is advisable to calculate the surplus amount available after subtracting your regular expenses from your net monthly income. This ensures you can service the loan without any liquidity crunch.
Make extra payments
Another way to reduce the EMI and the interest expense throughout the loan duration is to make an additional payment. For example, if your EMI is INR 14,200, you can pay INR 15,000 without adding too much burden on your cash outflow. This means that you repay an additional INR 9,600 annually, thereby reducing the total interest and loan period. You can use an online car loan EMI calculator to help in making a wise move.
Buy a car within your budget
You can choose from different models manufactured by various companies. Before you purchase the car, determine your budget and then search for options within the available amount. This will ensure you do not overstretch your financial limits and can repay the loan without any trouble.
You can apply for a car loan online or offline. The entire procedure is simple, quick, and hassle-free. The documentation is minimal, and lenders like Mahindra Finance offer customized solutions to meet your requirements. Visit the financial provider’s website to check the car loan eligibility criteria.
