Regretting taking a car loan? Adopt these 5 smart methods, 5 years’ debt will be settled in 3 years

Nowadays, buying a new car has become quite easy. In just a few clicks, the loan is approved and the car reaches home. However, the real challenge comes in repaying the loan. Most banks charge 8 to 12% interest on car loan. As a result, lakhs of rupees more have to be paid in the name of interest on a loan of 5-7 years.

With smart planning, you can reduce the loan tenure by several years and save huge amount of interest. In this article, we will tell you 5 best and practical tips to repay the car loan taken from major banks of India like SBI, HDFC Bank and ICICI Bank quickly and wisely. By adopting these methods you will be able to repay your car loan as quickly as possible.

1. Pay more than the minimum EMI

Apart from EMI, pay extra Rs 500-2000 every month. It goes straight to the principal, the interest is less. For example, by paying Rs 1000 extra at 9% interest on a loan of Rs 5 lakh, the loan will end 2-3 years earlier, set it easily from the app.

2. Get loan refinancing done

If the interest rates fall in the market, close the old loan and take a new loan with low interest (7-8%). Banks like HDFC or Bank of Baroda offer easy refinance. This reduces the monthly EMI or reduces the tenure. Documents are less required, but keep your CIBIL score good.

3. Choose small EMIs

Pay half EMI in 15 days instead of once in a month. Instead of 26 EMIs in a year, it becomes 27 EMIs. Banks mostly provide this facility. This can result in interest savings of up to 10-15%. Set auto-debit so that no mistake happens.

4. Make lumpsum prepayment from bonus-reward

Deposit a lump sum amount through salary bonus, tax refund or selling your old car. Most banks in India do not charge prepayment charges on car loans (RBI rules). By paying Rs 1 lakh once, Rs 50,000 can be saved in interest.

5. Create a budget and cut expenses

Keep 50% of your income every month for loan. Reduce unnecessary shopping, eating out. Increase savings through SIP or fixed deposits. Also do tracking through loan calculator app. Keep auto-payment on and save late fees.

With these important tips, a 5 year loan can be finished in 3 years. Always talk to the bank and make a plan. Smart repayment will improve your credit score and make getting your next car easier. You can adopt this formula from today itself.