The best ways to financially manage your car 21st December 2022
A car is usually the second most sought-after asset for any household in India after a home. Buying a car is not an expensive affair anymore as it is easy to get a car loan and repay it through a fixed monthly deduction from your account in the form of EMIs. But wait, there is more. You need to consider many other aspects than just the car's initial price.
You will incur many other expenses towards your car in the form of annual insurance renewal, fuel, maintenance, repairs, etc. You have to consider all these expenses while planning for a car.
Let us go through the best ways to manage your car financially.
1. How much to spend:
The first question that comes to mind while buying a car is how much to spend on it so that you are comfortable enough to meet the down payment, monthly EMIs, and other running expenses. You need to make a budget and jot down your monthly income on one side and current expenses, including other loan repayments, on the other side. It will give you a fair idea about how much spare money is left with you each month that you can spend on the car.
If the proposed EMI is more than the spare monthly money, you should go for a car of lower value. Understand that cars are meant to give us convenience rather than a financial burden each month.
2. Make a big down-payment:
Try to make a big down payment for your car, which will reduce your loan amount and ease the pressure on you to repay it in the following years. Also, you can bargain well for the interest rate when you seek a smaller loan.
3. EMI management:
Go for a shorter duration loan tenure. The longer the loan repayment period, the higher the interest you will pay on your car loan. By clearing your loan quickly, you will become the valid owner of your car much sooner and can sell it if you wish.
Once you have fixed the tenure, ensure you get all your EMIs. Missing an EMI will harm your credit rating. Poor credit rating makes it difficult for you to get a new loan from a bank or a financial institution for any purpose. Moreover, if you miss a few EMIs, the repossession agents will take away your car. This can be a major embarrassment for you and cause a lot of mental agony and pressure.
Your misery does not end here. If the lending institution auctions your car for a lesser amount than what you owe them, they will still come after you to get back this deficit.
4. Go for an extended warranty:
You often get an extended warranty with your car against some extra payment. This payment may pinch you initially, but it can be very useful if your car malfunctions during the warranty period. The warranty will cover the repairs and renewal expenses, and you will save a lot more than what you paid for the extended warranty.
5. Car refinancing:
After taking a loan while purchasing the car, you may find out that you are getting a better deal on repayment or interest from some other lender. In such cases, you can opt for a car refinancing facility. This will replace your existing car loan with a new one from another lender and help you save money.
6. Talk to your lender:
Sometimes it may become inevitable for you to repay EMIs due to financial constraints. In such cases, feel free to talk to your lender and modify your repayment schedule. After all, no lender wants to take the pain of repossessing your car and arranging its auction if an alternate payment schedule is available.
It is important to manage your car’s finance in the best possible way. You will enjoy a good credit rating from the agencies and save money by paying the lower interest on your car loan.
Car insurance is another way to manage your car financially. It will provide security and cover all expenses if your car gets stolen, has an accident, or gets damaged due to natural calamities such as a fire or an earthquake. Buy car insurance online India and save further on insurance costs right from the comfort of your home. It’s time to make the right investment to get the best returns.
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Disclaimer: The information provided above is for illustrative purposes only. To get more details, please refer to policy wordings and prospectus before purchasing a policy.