Personal Loan

Tips to reduce your car loan emi in 2022


Buying a car has become one of the most important aspects of modern living. For some, it is a dream milestone; for others, it is a necessity. Thanks to the many finance companies, buying a car these days has become easy. With a nominal down payment and a car loan, you can drive away in your favourite car. Do your research before finalising the loan, spending extra time now will save you lots of money and time. Here are a few tips on how to reduce car loan EMI.

Plan Your Finances before taking a Car Loan EMI

This is a general tip before you take any type of loan. Make a list of all your savings. Calculate the amount of loan required. Also, determine the maximum EMI you can afford to repay. Doing this helps with repayment. It also helps with not ending up with very little money for other expenses. 

However, one thing to note here is that the maximum loan you will get depends on your CIBIL score, which shows your credit history. Then the salary and age are also considered. 

Apart from the price of the car,  registration and other fees get added. So you should include those in your car price calculation. Generally, you can get 90% of the price of the car as a loan. The rest is to be paid as a down payment. Many finance companies give you the full cost of the car. If you want such an option, do your research. 

Negotiate the Price of the Vehicle

Now that you know your financial position, pick a car within your budget. Pick a car depending on the purpose. For instance, you can look for an economical SUV to drive your family in. If you are going to drive to the office, choose a car with good mileage. 

To reduce the EMI on your favourite car. Try to negotiate on the car price, as that automatically reduces the EMI to be paid. Also, when looking for a loan, try different vendors. You might get a better deal, or you can get free accessories. Avoid getting car insurance from car dealers. There are many insurance companies online that offer a better price. 

Compare Interest Rates and Car Loan EMI before Taking a Loan

You can easily compare loan interest rates from various lenders. The rate of interest they charge has an impact on the repayment amount. Even a small decrease in interest rates will help you save money in the long run. Along with comparing interest rates, check the processing and other fees charged. Compare both and find the best lender that offers more savings. Another important thing to find out about is the late or missed payment charges. 

Make a Bigger Down Payment

A down payment is a nominal amount you pay when buying a car. If you can manage to make a bigger payment, the amount you have to borrow will be reduced. The interest is calculated on the amount borrowed. So if you borrow less, the loan EMI is also less. So paying a bigger down payment and reducing EMI is better. 

Opt for Low EMI Cars Loans from your Bank

Loans are granted only if the lenders trust you to repay your debt. If you are a bank customer, get a loan from them. This is because having frequent transactions with that bank increases your chances of receiving lower interest rates. Some banks also provide pre-approved car loans. You can take advantage of these offers to get a better deal and lower your car loan EMI.

Choose a Longer Repayment Period

This is another option to lower the EMI on a car loan EMI. But when you increase the payment term, the repayment amount gets spread over a longer period. That means you will get low EMI cars with fewer monthly instalments. But the problem here is that you will end up paying more in interest. So choose this only when you are sure you cannot manage your other expenses with your car loan EMI

Make Prepayments

When you have some extra cash in hand, make prepayments on the loan amount. That will allow you to negotiate for a lower EMI. Lenders have the option of prepayment after a certain time. Make use of this by depositing extra cash into this account. That means you pay your loan in advance and reduce the interest payment. 

Refinance your Loan

Suppose you are already paying a car loan EMI and are feeling stressed because of that. You can look for refinancing. It means you can get the bank to change the terms of the loan. It can involve changing the term, payment schedules, or interest rates. It involves examining the person’s repayment status to benefit the borrower more. But the drawback is that you will end up paying more to the bank. Before choosing this option, consider all the advantages and disadvantages.  

Do a Car Loan Balance Transfer

If you have taken out a loan at a higher price and the bank is not reducing the interest rates. You can explore the possibility of a balance transfer. A balance transfer can get you a longer payment term or reduce the interest rate on low EMI cars. Many even give you a few months off from paying interest on the loan amount. But check the processing fees and other charges. Before the balance transfer, get to know this so you can benefit from the transfer. 


Choosing the right lender for your car loan can impact your car loan EMI. Follow the above tips to get the best loan option that suits your budget and needs. Do some extensive research on the interest rates and processing fees. That will give you an idea of what you can expect to pay for the car you have decided to purchase.