If you’ve availed of a used car loan, its EMI payments naturally make a good chunk of your monthly expenses. Many borrowers think about paying it off before term to become debt-free. This could be either because they want to free their finances up for another loan or perhaps for a big-ticket expense. If you’re one of them, know that it is definitely possible to pay off your car loan faster with the right approach.
In this article, we tell you how to pay off your car loan faster in a sustainable way.
Pay just a little more than your EMI
Here is a trick for you! Say, you pay a monthly EMI of Rs. 12,250 towards your second-hand car loan. Instead, if you round it off to Rs. 13,000, you end up paying only an extra Rs. 750 per month. But, your annual loan amount decreases by Rs. 9000, which is quite a bit. Depending on how much more you can afford to pay, you can revise your monthly EMIs to pay your loan off.
Prioritize disposable income for prepayment
Most lenders allow you to prepay a second-hand car loan if and when you can. So, if you come into additional source of disposable income, use it to partially pay off the loan. Doing this will not only reduce your total loan amount but also cut down on total interest payable. However, before prepaying your loan, inquire about any prepayment charges your lender might incur.
Additional Read: What to Expect from the Used Car Loan Market in 2021?
Choose a car you can easily afford
Just because a vehicle is second-hand doesn’t mean it comes cheap. In fact, the used luxury car market is thriving, and high-end model prices are relatively high. Don’t get swayed by the lure of purchasing one unless you can make the EMI payments. For instance, if you can buy a second-hand Ford Figo without having to alter your lifestyle to pay off your used car loan EMIs, don’t invest in a Mercedes-Benz.
Temporarily curtail frilly expenditure
Don’t radically alter your lifestyle just to pay off your second-hand car loan faster. Simply cut down on non-essential expenses. If you dine out twice a week, cut it down to once a week. Instead of taking two elaborate trips in a year, make do with just one. Essentially, stay away from potential frilly expenses just long enough to pay off your loan faster.
Additional Read: Tips to Reduce Your Used Car Loan Interest Rate
Looking for a second-hand car loan?
If you want to avail of a second-hand car loan, look for a lending institution that provides a competitive used car loan interest rate.
Tata Capital offers customizable second-hand vehicle finance at low ROIs with flexible repayment tenures and minimal documentation. You can also apply for a second-hand car loan with us online. If you want to figure out interest rates or calculate your potential monthly instalments, use our online used car loan EMI calculator.
To get more details about our used car financing options, log on to our website or give us a call today!