By Admin 
Car Financing Tips: Buying a new car is a happy moment. But when this purchase is made on loan. So wisdom becomes even more important. Seeing the small EMI, the actual expenditure cannot be estimated. The real cost is hidden in interest, charges and terms. If you got the finance done without understanding it properly. So the same car which is giving happiness today. It may cause trouble tomorrow. Therefore, just liking the car is not enough. It is also important to understand these things regarding loan. Knowing these five things before signing can save you from a wrong decision.
Keep an eye on the entire payment, not the interest rate.
While getting a car financed, most people only ask for the interest rate. Whereas the real thing is full payment. The interest on two different loans may be equal. But due to different tenure and charges, there is a big difference in the total payment. Therefore, definitely ask how much money you will pay in total for the tenure. Processing fees, file charges, GST and other charges are not reflected in EMI. But increase the total cost. This figure will tell you how much your car is actually costing.
Higher the down payment, cheaper the loan.
Often people think that they can buy a car by paying less down payment. But this means more loan and more interest. If you deposit a good amount in the beginning. So your principal amount will reduce and EMI will also remain under control. This not only reduces the total interest. In fact, the financial pressure also reduces in the future. Try not to stop at just the minimum down payment. Rather give more as per your capacity. This decision will give you big benefits in the long run.
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Decide the loan tenure wisely
Long term loan makes EMI smaller. But the total interest increases a lot. At the same time, EMI may seem heavy in the short term. But the car becomes yours sooner and less interest has to be paid. Therefore, do not decide the tenure just by looking at the EMI. Create a balance keeping in mind your monthly income, remaining expenses and savings. Choose a plan in which the EMI is not high and the loan does not last longer than necessary.
Must read pre-payment and foreclosure terms
What is your income today? It is not necessary that tomorrow remains the same. Maybe in future you will get a chance to repay the loan early. In such a situation, if the bank imposes a heavy penalty, your profit gets reduced. Therefore, while taking a loan, definitely ask how much will be charged on pre-payment or foreclosure. Some banks charge higher fees in the initial years.
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Don’t get trapped in insurance and extra packages
Showrooms often bundle expensive insurance and accessory packages with finance. These are stated together in EMI. Due to which the real value is not understood. You have every right to buy insurance from outside and compare rates from different companies. Apart from this, only avail extended warranty, maintenance pack and other add ons. When they are really needed. Otherwise you make your car more expensive unnecessarily.
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