Buying A Car On EMI? Here's the Guide

Your first car is as good as your first love, if not more, however the choice of opting for car loan EMI is always a tricky one.

Buying A Car On EMI

Thinking Of Buying A Car On EMI? Here’s The Best Guide

Your first car is as good as your first love, if not more, however the choice of opting for car loan EMI is always a tricky one. However, that feeling of finally owning what you always wanted but never had is unmatched and irreplaceable. This is perhaps the reason for the large number of people that decide in favour of car loan EMI.

To put this in simple words, your car isn’t really just an asset and the gains are not limited to the monetary prospective. Your car is a place to create memories, an expensive place which needs big investment.

Thankfully, there are many services offered that aide you in turning your dream into reality, you can easily get your car on EMI with the help of a car loan for any XYZ Bank. Once the documentation is done, your request is processed and you bring your dream car home that is when the real deal begins, the start of your car loan EMIs.

Taking a car loan is sort of a big risk and these car loan EMIs need to be paid on time for the drives to remain stress-free. A missed EMI starts a formidable loop leading to penalties, increasing debts and most importantly – poor credit score. This is where you need to maintain utmost composure and balance out your monthly expenditure and your car loan EMIs.

To assist you with this further, we have listed down some ways in which you can manage your car loan EMIs:

Cut Down Unnecessary Expenditures

The most basic and layman advice would be to give up on avoidable luxuries. It always feels nice to shop, buy new stuff, fine-dine but when you have your car loan EMI as an unavoidable expense you need to reconsider your priorities. Also, giving up on the costly junk food could also result in better health for a change.

If you have a habit to spend generously it is the most important thing for you to consider. For starters, make a list of all the small and big expenses that you would be requiring in the near future. Once you are done with that, calculate the surplus money that would be left with you and basis that, made modifications in your expenses. Stick to the plan. This is the easiest and most basic way to be on time with your car loan EMIs.

Increase Your Dispensable Income

Now that you have a car loan EMI to take care of, it would be wonderful if your income increases suddenly to take care of your additional expenses. However, things don’t work like this in the ideal world. So the only way remaining is to maximize your cash flow. This would mean your dispensable monthly income to increase, so that it balances out your car loan EMI.

Shut off the investments that are not really giving you good returns. Do your homework and invest in options which would give you returns of at least 12-15%, this can easily boost your monthly income by 10%. This extra money can come in handy to pay off your EMI.


Yes, you can actually restructure your car loan EMI if you are facing difficulties with the existing financing structure. Banks actually adjust the EMI, loan repayment time and interest rates based on your willingness and capacity to repay the loans. Also, under the “Balance Transfer Schemes” you can actually transfer your car loan to any other bank which is willing to offer a better interest rate for your car loan EMI. Once you are done with this, the principal amount remaining is transferred to the new bank with new car loan EMIs.

NOTE: Play smart here, frequent switching of banks actually affects your credit score. Also, when you switch, you have to pay the existing bank a nominal charge and switching banks is a little time taking process. So just, don’t be too frequent.

Now that we are done with this, let’s see why is it so important to pay your car loan EMIs on time:

  • Nonpayment of EMIs, being late or missing them puts your financial future in jeopardy.
  • Being loyal and on-time, keeping a good record helps with the banks as they go out of the way to help you when you are in distress.
  • Nonpayment of EMIs affects your Credit Score drastically.
  • Timely payment increases your creditability with the bank. This also opens up doors for special deals and offers from the service provider.

What to do if you are unable to pay your car loan EMI?

Defer The Payments

Sometimes the problem isn’t that you are not able to pay this much, the problem is that you are not in a situation to pay at all financially. If you are certain that in a few months your financial situation will change and you can pay your car loan EMI then, banks actually grant you relief, this is your break-free time to find new ways to increase your cash inflow.

NOTE: Once this time period expires, your car loan EMI starts again but now this will also include Delayed Payment Charges which is sort of a late penalty.

Lump Sum Settlements

Obviously, this isn’t really a feasible option for your home loans, but for your car loan this is a feasible option. However, lump sum settlements really kill your credit score. Getting a loan in the near future becomes really a grueling process.

Add-In An EMI Protector Add-On To Your Insurance Policy

There are options where you can add-in an EMI Protector scheme for your car loan EMIs or in your motor insurance policy. The benefits are many, with the major one being: if your car is totalled or destroyed and the owner of car sustains injuries and require hospitalisation beyond specific days then you can expect your EMIs to be partly paid by your motor policy.

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