Sponsored: Here's how to pay your car loan EMI on time without straining your budget

 BT Online   New Delhi     Last Updated: November 1, 2017  | 16:15 IST
Here's how to pay your car loan EMI on time without straining your budget

A car is not only an asset, rather investing in a car is profitable in several ways. But cars are expensive as well and owning this dream-machine calls for a big investment. However, you can still turn your dream of owning a car into reality with the help of a car loan.  Many banks in the market offer car loans at very attractive rates, and such easy funding has made it super easy to purchase a new car.

But, once you opt for a car loan and bring your dream car home, what's next? You need to pay the EMIs on time to enjoy stress-free rides. A missed EMI means piled up debts, penalties, and poor credit score. Hence, the real tussle starts here. As you have to juggle between your car loan EMI and monthly planned budget, you might miss to pay the EMIs on time.

To help you out, here we have listed out a few tips to timely pay your car loan EMIs without spoiling your budget:

Maximize the cash flow

When you have any loan EMIs to be paid, be it personal loan or car loan, your monthly income should considerably increase to balance your monthly investments. At first compare the outflow (monthly payments) and inflow of funds (monthly returns) and then decide whether the returns are sufficient to manage all the payments.

Since, your target is to maximise the cash flow, close the investments that are not giving you good returns and invest in options which will bring good returns of 12-15%. In this way your monthly income might increase by 10-11% than the interest that you are paying for the car loan. With this extra amount, you can easily pay your monthly EMI without crossing your budget limit.

Control the extra expenses

It is always nice to shop and invest in costly items, but with a car loan EMI in your monthly payment list, you have to control the extra expenses. If you have an ingrained high-spending habit, it is obligatory to bring it under a fixed limit.

To start with, list out both the big and small expenses that you are planning and estimate the required amount of money. Once you get the count, compare with the surplus money you will be having for the month and based on that tweak your existing budget. While spending, invest in such a way that it should not go beyond the surplus money. In this way, you can pay the car loan EMI easily without straining your monthly budget.

Monitor your expenditure

Controlling yourself from overspending is not enough. You never know when your budget will cross the threshold making you struggle to pay the monthly EMIs on car loans. The best way to keep the monthly expenditure within limit is to keep a track of it on a daily and weekly basis. Save all the grocery, restaurant, and fuel bills to know how much you are spending on these every week. Also, collect all the ATM receipts, invoices, etc. and keep monitoring your account balance on a regular basis.

If you find yourself overshooting the budget at any moment during the month, you can limit the expenses right then and save the required amount to pay your car loan EMI by the end of the month.

Restructure or opt for balance transfer

Yes, you heard it right. You can restructure your existing car loan if you face difficulties in paying the EMIs on time. Under this, your bank will adjust the interest rates, EMI and the loan repayment tenure based on your repayment capacity. Apart from this, you also have the option of transferring your car loan to another bank which is ready to offer a lower interest rate by opting for 'Balance Transfer Schemes'. Just choose a bank having lower interest rate and transfer the balance to that account. Once you do that, the unpaid principal amount will be transferred to that bank and you need pay lower EMIs for the rest of the tenure. In this way, your car loan interest pay outs will get reduced significantly for the rest of the tenure.
 
Whatever you opt for, play smart as frequent restructuring or switching from one bank to another might affect your credit score. Also, every time you make the switch, you need to pay a nominal fee and have to go through a loan approval process.

Why you should pay the EMIs on time?

1. If you pay your EMIs late or miss the deadlines every month, you will risk your financial future.

2. Late payment of your car loan EMIs will affect your credit score. If you have a credit score below 750, you mightn't be considered eligible for any loan in future.

3. Timely payment of EMIs proves your creditworthiness and increases the bank's trust on you. This will help you to avail attractive deals and special offers in future from the lender.

4. If you maintain a good EMI payment record, in future whenever you are in financial distress the vendor will help you out with a solution that is mutually beneficial.

So, now that you know how to manage your budget and monthly expenses, don't worry about paying your car loan EMIs anymore and enjoy a comfortable ride in your dream car. Just keep these above mentioned tips in mind and you will be able to pay the EMIs on time without straining your pre-decided monthly budget.

 

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