Borrowed a Car Loan? Know smart tips to pay your car loan faster .So if you have borrowed a Car Loan of Rs. 5 Lakhs for a loan tenure of 60 months i.e. 5 years at 10.25% p.a. rate of interest you will pay a monthly EMI of Rs. 10,685 however at the end of the loan tenure you will end up paying a total amount of Rs.6,41,108 towards your car loan. Just if you can pay a little extra and close your loan deal you will be able to get rid of paying an EMI of Rs.10,685/- every month along with the interest that you will have to bear. So why pay unnecessary interest towards your car loan if you can repay your loan faster and close the loan account. Enlisted below are certain tips to pay your car loan faster:
• Make prepayments: You need to see that you have a clause in your loan agreement that allows you to make a pre-payment at frequent intervals without levying any penalty towards making pre-payments. If you plan to pay atleast 1 pre-payment equivalent to your EMI you will be able to deposit two years EMI in a single year.
• Make one large Pre-Payment: If you are a working professional and you are getting benefitted from perks such as annual bonus or even if you have recurring deposit that have matured recently or any other allowance; you can make use of such additional income and deposit it to your loan account. This will enable you to lower the overall burden of the loan.
• Do not Default: There can be situations where you may be a little cash crunch however, it is suggested that you never fail to make payments in time and keep your accounts funded for you to pay your car loan faster. Not paying payments in time can instead add on penalty towards making late payments. Never defaulting in making payments in time can help you to not just get rid of your loan faster but also enable you to borrow more loans with greater ease.
• Consider Car Loan Re-finance: Check the current rates of interest at which other lenders are offering car loans. If the other lenders are offering car loans at cheaper rate then all you need to do is to take a balance transfer and lower the overall cost of your car loan. You can compare various interest rates at Letzbank and know the lowest rate of interest being offered by the leading banks in the country.
• Pick a Car Loan offer with Zero Fore-closure penalties: When you borrow car loan see that you will be able to fore-close the loan without being posed any penalty to make a prepayment or a fore-closure. Normally the banks charge any amount from 0% to 5% on the outstanding amount as a fore-closure penalty if anyone wants to fore-close their loan in the middle of the loan tenure. Therefore, you need to take a call on how much money is being charged if you wish to closure our loan account before your loan tenure ends.
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