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Repayment Of  A Car Loan

Car loans are becoming the usual way to own your personal four-wheeled dream. You don’t have to haggle with the dealers for loans or spend all your life savings to own an automobile. You can just apply for a car loan by sitting at your home and repay the amount with one click. 

Repayment refers to the periodic payments that are made by you to satisfy the car loan. There are different types of repayment options available. The applicant should be aware of all the advantages and disadvantages of the same. 

Following are the 5 most common repayment schemes offered by the banks:

Standard EMI - the most common repayment scheme, a monthly installment amount is decided mutually based on the rate of interest and loan tenure. These are paid either at the beginning of the month or at the end.

Step-up EMI - in this, the first EMI is lower compared to other EMIs and is meant to increase by the time, expected that the income of the borrower also increases.

Step-down EMI - In this, the EMI amount gradually decreases from high to low. It depends upon the number of payments made. 

Special tie-up method - it has been seen that sometimes the dealer and the borrower has good terms and agree to a condition that whenever there is an excess of funds, it is used in the prepayment of the loan. This helps in reducing the principal amount and the overall interest rate too.  

Balloon EMI - here the borrower is allowed to make a lump sum amount towards the end of the tenure. This reduces the initial burden for the borrower. 

A car loan repayment schedule will show how your EMIs pay the principal amount and interest rate. A car loan repayment schedule gives you the track of your EMIs, interest on the outstanding principal, and how your principal is decreasing with each monthly instalment. If managed properly it helps you plan your future budget and also the prepayment of the loan if possible. 

Before applying for a car loan, you should calculate the affordability based on the interest rates and also decide on the tenure. For this, you can use a car loan EMI calculator. This will not only ensure that you are not going overboard with the loan amount but also help you choose a vehicle that fits your budget.

You should calculate the loan repayment online once as it helps instantly displays the monthly EMI, total interest payable, and other details. Thus it is always advisable to calculate the EMIs beforehand so that it is easier for the applicant to plan other expenses. Axis Bank car loan facility provides various repayment options for the borrower’s convenience.

Conclusion:  Different lending institutions offer different types of repayment schemes. One thing we can be relieved of is that there is flexibility in the repayment method. Thus it makes it easier for the borrower to have a loan repayment method of his own choice. 

Also Read:- Terms to keep in mind while taking a car loan