As we live in times of increasing inflation, buying your dream car is an important milestone in everyone’s lives. Therefore, many of us purchase car on loans. Getting a car is now easy. The entire process is very simple with minimum documents requirement and gets completed within a few days.
So, it is important to know the best practices to follow if you want a cheaper and affordable car loan. If you plan attentively, you can get a car loan at very low interest rates and affordable EMIs. Listed below are some of the smart measures to reduce EMI’s and negotiate with the lender.
Negotiate car’s price first
One of best methods to reduce the car loan EMI is to negotiate on the price of the car first. Car dealers make big profit margin while selling the car. It is always advised to visit at least 4-5 dealers for the best deal and try to get more and more free accessories or services.
Choose a shorter tenure
The longer the period of the loan, the more will be the interest. Therefore, to avoid paying more interest, always go for a shorter period to replay your EMI. If you can’t afford to pay a large amount of interest then you can opt for a longer tenure. So, be carefully while extending your loan tenure. This, in turn, reduces the monthly installments.
Always pay higher down payment
Make a higher down payment on the car. The interest of a loan is calculated based on the principal amount taken from the customer. Therefore, the lower the principal amount, the lower will your EMI. So, it is a wise decision to pay a large amount as down-payment.
Consider taking loans from your existing bank
If you are already a customer with a certain bank, it is advised to consider the same bank account for buying a car loan. Your banker can give you a lot of offers and options. So, it is always advised to ask your existing banker.
Look for NBFCs from car manufacturing companies
The NBFC from an automobile manufacturing company is most likely to give good loan deals that can help you to save money. First, let them offer you the offers and then you tell them that you want to take a loan for the car.
Take a balance transfer loan
Balance transfer loans are offered with lower interest rates and helps you to reduce your loan EMI. However, be cautious about processing fees and other charges. If they are high, the whole process of balance transfer may prove futile.
Look for a lender with no or less processing fee
It is important that you enquire about the processing fee while approaching to a lender. It may not affect your EMI but can reduce the cost of your ownership.
In case you have received raise or have some money, it is highly recommended to partly or fully prepay your loan. Most bankers allow partly payment after a certain period of time. Take advantage of this and prepay your loan. This will reduce your interest liability.
Buying a car is a huge decision. An affordable car loan makes your journey easy.