What are some tips and tricks for managing a car loan?

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If you are looking forward to purchasing a car, it has to be done in the right time or else you may miss the opportunity. It may not be solely possible to contribute the whole amount for the car in the first go but if you have some money and know that you can manage to pay the rest in installments, you should definitely go for car loan. This is easy to apply for and get and there are quite less hassles compared to other loans one may think of.

managing-car-loan

There are few tips that will help you manage a car loan better and make payment easy.

  • While applying for the car loan, make sure to pay as much money as possible in the form of down payment. Down payment will reduce the remaining balance and your total interest will be lower. If you don’t have much, pay as much as possible. It is not a good idea to pay more installments and less as down payment. You can even reduce the number of years required for payment in case you make good down payment. Monthly burden for a long time is not going to give you any relief.
  • Keep the loan term short as that will help you stay worry free. If you are taking a loan for four years instead of five years, you can have a year free of worries. The car will depreciate in value with each passing year and after five years it may not be as good as you want it. You may think of buying a new car at that point of time but if you have the loan going on, you will lose interest and may have to continue with the old one with quite less advantages.
  • Take insurance for your vehicle but don’t get swayed by the add-ons. Add-ons definitely have some advantages but they increase the amount of premium. While some add-ons are beneficial, some are not. You shall not go for any such extra benefits without judging how frequently they are used. This is mandatory for every insurance holder.
  • Choosing your car smartly will reduce your burden. There are some cars that are more prone to damage while some are not quite vulnerable. It is important to do proper market study before making the purchase. This will cause lesser depreciation and you will have lesser trouble while paying the car loan. Don’t just go for a luxurious car without thinking of the cost of maintenance and the high EMI. Take a car within your reach.
  • Make a proper schedule for the EMIs to be paid. Automatic transfer from the bank is the best thing that you can do as that will make sure that the EMIs are paid every month without fail. The date shall be just 2 to 3 days after your payday. This will make sure that the installment is paid and you don’t have any impact on your credit score.
  • It is very important to manage your expenses well if you have a loan to pay off. You have to make sure that you don’t use it for occasions you can do without them. You shall also take care of its maintenance so that you don’t have to pay much on the damage.
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