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Optimize Your Car Loan Emi With Reference To Family Expenses
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A car loan is used to purchase a new or used automobile. You borrow money from a lender and pay them back over time with interest. However, when you do take a car loan, you will need to adjust the method of payment for the EMIs. In this article, let’s explore how to optimize your car loan EMI with reference to your family expenses.
• Secured or Unsecured Car Loan?
Mostly, car loans are either secured or unsecured. This plays a beneficial role in repayments of EMI as it affects the interest rates you will need to pay. With a secured loan, you will normally have to pay a lower interest rate, but there is a risk that you will lose your collateral you had placed as security. Secured loans are the mostly only available for new cars as they have more value as an asset for collateral. With an unsecured loan, you will need not use an asset as collateral but you will have to pay for a higher interest rate. Therefore, depending on the type of car you want, whether it is used or new, you can choose the ideal loan you can go for.
• Floating Interest Rate Or Fixed Interest Rate
When you are applying for a car loan, you will need to select the type of interest rate that will suit your needs. The type of interest rate you select for the car loan will influence the payment duration as well as the EMIs. With a fixed interest rate, you will have to religiously pay the EMIs as per the interest rate in car loan contract. However, with a floating interest rate, the interest rate remains flexible and varies with market conditions. Therefore you may get to pay low interest rates that can spike up too. You will have to take that risk.
• Long Tenure or Short Tenure?
Most car loans have a maximum of 7 years repayment tenure for car loans. However, the EMI’ for this period will be very low. If the tenure of the repayment for the car loan is short, the EMI will be higher. Therefore depending on your needs, you must find the most suitable length of tenure for you to repay the car loan. A shorter tenure of repayment means you can then plan your finance for the next loan or even your expenditures. Thus try and keep the repayment tenure as short as possible with the suitable interest rates for your finance.
Author Bio :- Neha Sharma; a finance student, loves to write about information related to car loans. Thus, it comes as no surprise that she wants to continue offering useful information about different aspects of car loan that you can benefit from.
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