Car Finance: Buying a car is considered as one of the biggest decision in Indian families. Despite, India being the fifth largest economy across the world, owning a car is still a luxury in the country. As the car is a depreciating asset, it becomes very important to understand how much a person shouls spend on a car according to his ability.
When an individual buys a car, its cost is not the only car that he/she needs to incure, there are several recurring expenses that comes with this asset like insurance premium and maintenance of the vehicle. Here in this article, we have listed 5 takeways that you should consider before buying a car in India.
Rule Of Thumb
There’s a thumb rule to buy a car, a person should never never spend more than his/her annual income to buy a car. For instance, if a person earns an annual income of Rs. 10 lakh, he/she should buy a car worth Rs. 5 lakhs.
Negative Compounding
Just because you have fulfilled the eligibility criteria of the lender, doesn’t means you can afford it. Increasing you car budget will become reason for negative compounding . You must not get attracted with the top end model of the car, its more important to know what is your actual requirements. Let’s says, if a bank is offering you Rs 30 lakh car loan, it does not mean you can buy a car worth the same because with increasing loan value, amount of interest also goes high.
Choose The Required and Right Size
You need to understand your requirements and expectations with a car, you should know the best size of car that suits your requirements. If you have a nuclear family, choosing a hatchback can be the best option and if having a joint family, you can go for an affordable MUV.
New Vs Used
It is always good choose what is actually required rather than fulfiling desires. If you are in a limited budget, you can consider buying a used car. Used car with no mechanical issues can save you a significant amount of money. The only considerable to take note of the condition of the car. Lastly, one must always consider used cars which are not more than 2-3 years old.
Additional Costs
When you buy a vehicle, it comes with some additional costs that you should take note before buying a vehicle. These additional costs includes fuel costs, Insurance premiums, maintenance charges and other. You are suggested to consider the technical specifications of the vehicle that your going to buy, it will help you to plan for the best vehicle for you.
Disclaimer: This information is provided solely for informational purposes. It is important to note that taking loans are subject to many other factor decided by the lenders. DNP News Network Private Limited never advises to choose a specific lender for any personal interest.
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