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How to manage your Car Loan?

Cars have become a basic need of today’s life, which is one of the main reasons for boom in the car loan industry. However, in fulfilling our dream of having a perfect car, we usually don’t plan enough before opting for a particular car loan. We will discuss how one can manage car loan:

Down Payment of loan:

This is first basic step where most of the car buyers make mistake. Most of the people think they can make small down payment and can buy higher priced car which was usually out of their budget. Even few people think by making small down payment they will be able to save money but a small down payment can cause various adverse effects such increase in the interest rate, loan tenure and payable EMIs. It is sensible while taking a car loan you should try to make a larger down payment so you can reduce the EMI amount and the tenure. On first sight, higher down payment might look like a big expense but it will help you save your hard-earned money and make the loan repayment process easy on your pocket.


In case you can manage higher EMI amount without hurting your monthly budget then you should go with the shorter loan tenure. People have a misunderstanding that loan tenure is independent of the interest rates of loan and loan amount but the truth is somewhat different. By choosing longer tenure you may reduce EMIs amount but you will pay more money as interest. A shorter tenure increases the individual EMI payouts but you also end up paying less money as interest over the entire loan tenure. This factor is completely depends on your budget and how much you can afford. It’s better to finish up loan early so you get out of debt.

EMI and Interest Rates:

While taking a car loan you should be clear about the interest rates and the subsequent EMIs offered by banks. It is suggested that you do some basic research in advance and  for the same you can even use some free car loan EMI calculator online to estimate your overall interest and EMIs outgo before signing up for a specific car loan. With the help of this research you can plan your car loan in better way without getting into any financial problems at a later date. You can even negotiate with the bank for the better loan terms if you have done your research. It always helps you in making your mind with the reality.

Even you should take car insurance as it will save you at least some money when you met with some mishappening with your car. Surely you would need to make the EMI payment but you can save on the car mishappening expense.

Car Loan Transfer:

If you are not happy with your existing car loan due to any reason then you have the option to transfer your existing car loan to any other bank. You can select other bank which is offering you better terms than your previous one. It will help you by changing your EMIs, interest rates and tenure according to your repayment capacity. This might help you in generating significant savings in terms of your car loan interest payouts over the remaining loan tenure.


It is important that before taking a loan you should plan your budget and loan repayment. It is advisable that you do your research about the key terms and conditions of the car loan such as pre-payment charges, processing fees, tenure, etc. before you finalize the option that suits your car loan requirement.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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