- Try to limit the loan to an amount such that the EMI does not exceed 15-20 per cent of your take-home salary.
- Remember that you would have other loans also and the EMIs of all of them should together not exceed 50 per cent of your take-home salary.
- The car loans available within the dealer's premises may not be the most attractive. Scout around for better deals on your own despite pressure from the dealer to take a loan from one of his lender partners.
- Many public sector banks offer attractive interest rates (see table) starting at below 9 per cent.
- Pay the maximum down payment you can afford.
- This will reduce your interest cost over the tenure of the loan. It will also allow you to opt for a lower tenure or lower EMI.
- Use online tools to compare car loan rates.
- Keep in mind the foreclosure charge. If it is high, you will have difficulty in closing your loan early.
- Business owners can deduct the interest paid on a car loan when filing their tax returns. Salaried people do not enjoy this benefit.
- Sometimes, you can get a better deal if you approach a bank towards the end of the month, when they have their monthly target to meet.
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First Published: Fri, August 02 2019. 07:42 IST