Everyone dreams of buying a new car at least once in their lifetime. Young or old, single or with a family, a car is an aspiration for everyone. If you are one of those looking to buy a brand new car or upgrading your existing one, then here’s a heads up as to how you can buy your dream car and not burn a hole in your pockets.
If there’s a new car on your checklist then check below for the two cardinal rules:
Loan amount – Your total loan amount should be such that it is not an amount that burdens you but also serves your purpose. Hence, an EMI amount that doesn’t exceed 10-15% of your net monthly income should be your limit. Anything more than that, is not advisable.
Cost of the car- Ensure that the make and kind of the car that you opt for is something that fits your budget and use. For eg. if your annual income is Rs. 12 Lacs then your car should cost less than 50% of your income i.e., Rs. 6 Lacs so that the EMI is around Rs.15,000/month. Thus, you wouldn’t overreach yourself and have only a reasonable amount as your loan amount.
If you are looking for an upgrade and not a brand new car then the rules change only a tad. If your old car is still under loan, buying a new car is not something you should consider. Settle the loan amount first and then make the next move. Make sure that the down payment of the new car can be covered with your old car and only the remaining amount is your responsibility to pay. And if you have good savings to sponge on, then you can have your new car without the hassles of a loan. Bingo!
Once the loan amount is paid off, a car is an asset to use. So if you feel you are careful about all the rules mentioned here, then go ahead and bring your dream car home. Remember to opt for a safe model and buy insurance along, right away!