Nowadays, a car has become a necessity for many people. Even purchasing a basic car requires at least 8 to 10 lakh rupees. Most people take a loan to buy a car, which provides immediate funds. However, paying monthly EMIs on the loan can later become a problem. If you want to get rid of the hassle of paying EMIs every month as soon as possible, here are some methods that can help you.
1. Make Prepayments
If you want to get rid of monthly EMIs as soon as possible, consider making prepayments whenever possible. Whenever you receive a tax refund, office bonus, or any lump sum amount, use that money to reduce your loan amount. Paying off your car loan early reduces the repayment period and saves you money on interest.
2. Increase EMI
If your income is expected to grow over time, consider gradually increasing your loan EMI. A higher EMI will help you pay off your loan faster, reducing both the principal amount and the total interest paid over the loan term.
3. Make Partial Payments Once a Year
You can make a lump sum partial payment of your car loan once a year. Paying 20-25% of the loan amount will reduce the principal balance, which in turn reduces both your EMI amount and the loan repayment period.
4. Get the Loan Refinanced
Another option is to refinance your car loan. Refinancing involves taking a new loan with better terms, such as a lower interest rate, to pay off the existing loan. This can help reduce the interest burden and shorten the loan tenure.
5. Close the Loan Early
If your financial situation improves and you have enough funds, consider closing the loan early with a lump sum payment. This will clear your debt before the due date and save you from paying future EMIs.
By following these methods, you can reduce the burden of car loan EMIs and become debt-free sooner.
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