How to manage a car loan - Tips and tricks
You have decided to buy a car and have come to the conclusion that you will need a car loan to do so. But the myriad of options are confusing and you have hit a roadblock. Here are some tips and tricks to help you choose the right loan and manage it well.
Which car loan to choose?
Car loans can be narrowed down to two types - for new cars or for used cars. As the name suggests new car loans can be used to buy a brand new car from the factory, while used car loans can be used to buy a pre-worshipped car which has had one or more owners. Here’s an easy to understand table -
|Feature||New Car Loan||Used Car Loan||Differences|
|Tenure||Up to eight years||Up to seven years||EMIs can be spread out over a longer period for new car loans, for the same budget your outgoing monthly payment will be lower on a new car loan|
|Down payment||Option of zero down payment can be availed||Minimum 10 per cent on-road value||For the same budget, you have to pay more up front when choosing a used car loan|
|Interest rate||9 per cent to 13 per cent||10 per cent to 16 per cent||With higher interest rate and lower tenures and higher down payment, new car loans make more sense if you want to keep your monthly outgoings low|
|Car||Limited to certain segments||Can buy higher segment car||As every car depreciates, used cars can be a better deal if you want to upgrade to a bigger/more luxurious car at a lower budget|
Once you decide which car to buy, you can leave the hassle of comparing the offers from different banks and financiers to online tools like CarWale. Enter some basic details and we can help you find the best car loan deal.
Get your Insta Car Loan Quote - Click Here.
Before you sign the dotted line!
1) Make sure you have calculated the cash flow from your savings every month after taking into account the EMI payments for the car loan
2) Make sure you have chosen the best tenure/duration to suit your financial condition
3) Make sure you have the resources to support you if a financial emergency arises, non-payment of EMIs will affect your credit score and your ability to apply for fresh loans in the future
What is a credit score?
A credit score tells financiers how good you are with the money you borrow. The calculation is based on previous loans you may have taken, including a credit card and easy-EMIs availed while shopping online. The better the score, the more willing financiers are to give you a good deal.
Every car loan enquiry on CarWale makes you eligible for a free credit score report from our partner Experian. Click here to get yours now and get the best car loan deals.
One more thing
Choose a good car insurance to safeguard your investment in your car from unforeseen problems like theft and accidents.