Many times, individuals have to postpone the purchase of a new car because they are unable to save enough for the same. Your prized possession should not burn a hole in your pockets. Considering the number of loan options available, purchasing a car has become easier.
Most banks finance about 80% of the value of the car, which means remaining 20% will be your down payment. The equated monthly installment (EMI) will have to be paid each month and it will be a fixed outgo from your monthly salary. So is there a trick to own a car without having to do this? Read on to find a way out.
Replace EMI with SIPs
Purchasing a car is not an overnight decision. It requires adequate financial discipline, planning, and market research, with the help of which, it can be possible to save enough to buy a car in the next five years.
When you seek a car loan, you will be required to pay EMIs for the next four to five years depending on the tenure and the amount of EMI settled with the bank. Instead, if you choose to start a Systematic Investment Plan (SIP) and invest regularly for these years before you plan to get your own car, you will have enough returns to accumulate the amount needed to buy a car. EMIs carry an amount of interest as well. With an SIP, there will be no additional amount you will have to pay. On the contrary, by investing in mutual funds, you will be able to earn enough to save for your car.
How mutual funds work
If you are wondering how mutual funds work, then let us tell you that mutual funds are managed by fund managers who collect money from investors and invest the …Read More