One of the best ways to buy an expensive car is to get a car loan which is also one of the most popular options for the young professionals in India. However, what are you to do when the monthly EMIs start to put a financial pressure on you? Can you reduce the finance charges on your car loan? The answer is “yes”!
How can you reduce the financial burden?
Let’s first understand what “finance charges” exactly mean. These are the charges that contribute towards your car loan, i.e. the total amount that you have to bear in installments until the full amount has been repaid. This amount is affected by three main factors which are:
When you want to reduce the finance charges on a car loan, there can be two possible situations which shall use different techniques:
Case 1: When you are planning to get a new loan
There are many ways to lower your financial burden at the time you are applying for the loan itself. For starters, you can check your credit report to see how your profile looks like. If it’s a CIBIL report, then your score should be above 750 (900 is the highest). You should also check the following:
Increasing your credit score has numerous benefits. Not only you can qualify for some of the best loans easily, you also have the upper hand when negotiating with the lenders. This is because you can point out that you have been a responsible credit user which is proven by the high score. So, you can say you should be offered a lower car loan interest rate as you will repay the loan without any problems for the lender to deal with.
Don’t make the mistake of applying for the first car loan you find “decent”. There are a number of options in the market which have varying interest rates. One lender may also be offering more perks than others. Thus, it’s a good idea to shop around so that you can choose the best available option.
Case 2: When you are currently repaying a loan
If you are already repaying a loan and want to lower your charges, then there are 3 main methods to go about it:
The tips above should greatly help. Good luck!
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