If you follow the below tips, you will be able to find the best way to pay off your Car Loan EMI.
KAMPALA | LIFESTYLE UGANDA (https://lifestyleuganda.com/) — Many of us like to drive around town in our cars, and sometimes we feel the need to show off. Unfortunately, getting a loan for such expensive purchases is not as easy as walking into a store and spending more than you can afford on something you want.
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When you get a car loan, there are a few things to keep in mind.
#1. Borrow from the bank, not your friends
Many people believe that if they borrow money from their family, it will be easy to pay off the loan amount every month. But you have to remember that car loans are taken for five years or more.
There may be unforeseen circumstances where you might lose your job or someone in your family falls sick during this time.
It can put tremendous pressure on your monthly finances and your relationship with your family members.
#2. Keep your car loan tenure short
Car loans are usually for five years or more. It might be tempting to keep it around ten years.
Still, by the time you finish paying off the principal amount on your loan, you will have paid close to double what you would have paid had you taken a shorter-term loan.
According to Lantern by SoFi, “Choose a loan offer, and on final approval, enjoy the extra cash in your pocket. It’s that simple!” If you’re looking to refinance a car, give them a call.
#3. Don’t put in any money
If you don’t have enough savings for a down payment, say no to adding on the down payment.
Most of the time, if you don’t put in any money, the interest rate offered on your car loan will be lower.
You can always make up for it with an additional installment at the end of the tenure when you get your next paycheck. It is better to hold on to your cash and spend it during tough times when you need it.
#4. Don’t pay the full amount when you can
Many people who buy new cars that come with a warranty don’t want to bother with getting an insurance policy for that car.
They try to cut down on their monthly instalments by paying off more than they should in one month. If this is the case, pay the additional amount in one go.
Otherwise, the bank will charge you interest on that amount for an entire year. You can use your savings if you plan to buy a car with a warranty in the immediate future.
#5. Don’t negotiate when buying used cars
You can negotiate with new vehicles to get the price down. However, new cars lose their value as soon as they are driven out of the showroom.
With used cars, this doesn’t apply. You will still be paying interest on that amount for years after making your first installment.
The above-mentioned tips will help you get the best possible payment method for your Car Loan EMI.