Strategise your income before a car buying decision

The EMI is not the only cost of owning a vehicle, as you must factor in maintenance costs as well. The bigger the down payment, the quicker you can pay off your loan and it's the key to reduce the interest on the loan

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The single most crucial thing when it comes to buying a car is your finances, and how much you can realistically afford to spend on a new car. For starters, how much down payment can you pay while buying your car? The more you can put down, the less interest you will have to pay. Also, the more EMI you can pay, the lower the total rate of interest you would end up paying on the loan taken from the bank. 

The next debate these days is petrol or diesel. The answer to that is simple: if you need a car to drive just a few kilometres everyday buy the petrol version so that you don’t end up paying close to a lakh rupees more for a diesel vehicle when you won’t recover the money on fuel expenses. 

While going in for a new car don’t just think of the EMI, you will have to pay on a monthly basis. Factor in servicing costs and periodical maintenance expenses (especially for diesel vehicle as components like Diesel Particulate Filter (DPF) have to be replaced from time to time). So do not stretch the budget of buying a car to such an extent where you can barely manage to pay the EMI but can’t afford to meet other expenses that arise out of owning a vehicle. Talk to owners of the vehicle you are planning to buy, go to service centres and find out the cost of maintaining the vehicle you are planning to buy. You will get a realistic view of how much one has to spend on the vehicle over a period of time over and above the EMI you will be paying. 

Car service centre

Then comes the business of paying for fuel. There is no point in going in for a vehicle if you cannot afford to fuel it. If your income is tight then forget buying for a fancy vehicle. Opt for the most economical vehicle available. The more economical the vehicle the smaller it is, which means it is also less expensive to buy. 

Remember, the smaller a vehicle, the lower the price of spare parts and taxes on servicing chargers. Small cars today are as good as big ones and pack in similar levels of equipment so you won’t be missing out by buying the top end variant of a small car compared to a big car a segment or two higher in terms of kit. You will spend less on the vehicle, too. Buy a big vehicle only if you have to. 

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