Five Ways to Finance Your Car in India

In India, getting your own car can be a challenge, especially if you don’t have any personal savings or family money to put toward the purchase. Even if you do have some cash to invest, there are times when you won’t want to sink it all into your dream car right away you might want to invest some of that money into other areas of your life, like starting a new business or buying a house. If this sounds like you, here are five ways to finance your car in India.

Seek Financial Advice
When it comes to making major purchases, we all have something called regret bias the tendency for people to attach more importance and emotion than warranted to events with negative outcomes. However, thanks in part to our own biases, a good deal of Americans often make decisions that have a negative impact on their financial health. A recent study from researchers at Harvard University and George Washington University shows that out-of-pocket healthcare costs are associated with an increased risk of bankruptcy within three years of becoming ill. It’s therefore important for consumers especially those who will pay more than 5% of their income toward medical expenses to seek financial advice before making large car purchases.

Know about EMI Options
There are five ways you can finance your car in India. If you choose a loan, that means you’re buying a car outright. You’ll be repaying it over time. Here’s how: Loan Amount × Months of loan repayment = EMIs (monthly payments) For example, if you’ve taken a loan of Rs 50 lakh and plan to pay it back over 36 months, your monthly EMI will come to around Rs 3 lakh. If you prefer leasing, your company buys the car on your behalf. You pay a monthly rental fee and when that comes due think of it as the rent you give up possession of the vehicle until next month’s payment comes in.

Consider Credit Score and Loan Eligibility
Before you even begin shopping for your next car, make sure your credit is up to snuff. A good credit score can ensure that you’re eligible for financing terms most favorable. Low rates, low down payments, and long loan periods can be yours if you have a 700+ FICO score and all of your finances are in order. If not, consider building up your financial profile before beginning a search for financing. From small-business loans to mortgages on new homes, lenders are increasingly looking at debt history when deciding whether or not they should provide financing.

Pick the Best Car Dealer
It may seem like a trivial decision, but your choice of car dealer could end up costing you a lot more than you expect. In order to buy your car at a fair price and on good terms, it’s important that you do some shopping around. For example, you might be able to get financing from one dealership while another dealership offers lower interest rates. Find out what’s available before you sign on any dotted lines so that you can decide which is best for your situation.

Choose between New Cars or Used Cars
New cars are nice, but they can be extremely expensive. If you’re shopping on a budget, look for used cars or affordable lease deals. You might even consider buying a car with cash if you have extra money sitting around. If you decide to finance your purchase, keep your term length at four years or less. The longer your loan lasts, the more expensive it will be over time as interest accumulates on top of interest. Remember that although all types of credit scores are important, having a healthy FICO score is critical if you’re planning on financing with a bank or credit union.

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