You have landed on a perfect car that matches your imagination and lifestyle. Now, all you have to do is to make it fit your budget. Availability of the car loans is a wonderful option for the buyers who cannot finance their dream car at a go. The competition in the auto loan business is intense so, taking time research the right lender defiantly pays you. Irrespective of the lender you choose to get the auto loan, you have to repay the loan along with the interest rate over the tenure of the loan. When it comes to taking a car loan, most of them are worried about adding space for loan EMI in their tight budget. Current article aims at guiding the borrowers about how to reduce your loan EMI.
Tips To Reduce Car EMI
Reconsider long-term loans
This option may sound odd when you are looking to lower car EMI. Though longer tenure of the loan promises you smaller EMI, you may be paying more interest over the life of the tenure loan and less paid on the principal balance which could end up in costing more than car worth. If you are serious about reducing car payments, revising the long term car loan is worth considering.
Reach the dealer with pre-approved loan
Reaching the dealer with the pre-qualified car loan will help get the loan at low rate of interest. You can also get the best deal on the car before discussing financing options with the lender. Offers you receive from different dealers can be used as effective tools to get the best bet on the car.
Increase down payment
The lender asks you to put down a certain percentage of the car value as a down payment to purchase a car. Most of the lender offers the loan for 80% of car invoice value, rest have to be adjusted towards the down payment. Effective ways to reduce your monthly car loan EMI is to pay more on your down payment.
Calculate total cost of the loan
Sign the dotted lines of the loan agreement only after you know the entire fee related to the car loan. You should ask the lender about the monthly payments you make for the car loan and another related fee if any. You should read the fine print of the loan document carefully to know the entire fee related to the car loan. Make sure to know the information about insurance charges and a prepayment penalty of the car loan if any before signing the dotted line. This knowledge will help you understand the space you have to allocate for the car loan in the monthly budget and also know total at which you are owning a car.
Buy the car you can afford
Last but, important is you should buy a car that fits your budget. Rather taking a long term loan to buy a car which you cannot afford. Prefer to choose the one that fits in your budget and allows you to clear the loan in short-term.