How to lower my car loan EMI?

You have just bought your dream car, but as the months pass, the burden of your car loan EMI becomes heavier. The stress of high monthly payments overshadows the thrill of driving your new vehicle. But what if there was a way to ease this financial strain without sacrificing your lifestyle? Reducing your car loan EMI can make your monthly budget much more manageable and simpler than you might think. Let's highlight some common methods.

Competitive rates

The rate of interest you pay on your loan is one of the factors that influences the amount of EMI you pay. To get the most competitive rates, check that you have a good credit history. A bank will check your credit score through a rating agency like CIBIL before finalising the loan. A good credit score – above 750 – will get you a better deal. 

HDFC Bank offers car loans at highly competitive rates, with EMIs starting at as low as ₹1,234 per lac.​​​​​​​

Longer tenures

Opting for a longer tenure will automatically bring down your EMI. For example, you will pay an EMI of ₹2028 for a 5-year loan of ₹1 lakh at 8% interest. But extending the tenure to 7 years can bring down the EMI by almost 25% to ₹1559.

HDFC Bank offers flexible tenures of up to 7 years. You can easily calculate your EMI online with our Car Loan EMI Calculator.

Larger down payment

You are happy with the interest rate and tenure and don’t want to change it. So, what options do you have then? If you can afford it, make a larger down payment on your loan. A downpayment is an initial payment made upfront when purchasing an asset. This will reduce your loan amount and, therefore, your EMIs. 

Prepayment

To lower your EMIs on an existing car loan, consider making a partial prepayment if the funds are available. Prepaying a portion of your loan can significantly reduce your outstanding principal and, consequently, your monthly payments. Before proceeding, check with your bank about prepayment charges to avoid unexpected fees.

Effective ways to make prepayments include using lump sum payments, contributing extra amounts regularly, applying bonuses or additional income towards the loan, or making an annual prepayment using savings or tax refunds.

Balance transfer

A car loan balance transfer involves moving your existing loan to a new bank that offers better terms, such as lower interest rates or more flexible repayment options. Transferring to a different bank can be beneficial if your current loan has a higher interest rate or lacks flexible tenure options. To explore car loan balance transfer offers, visit your nearest HDFC Bank branch.

By exploring these options, you can find the best approach for your situation and enjoy a more comfortable financial journey. Consider the associated costs and benefits to make informed decisions aligning with your financial goals.

Looking to apply for a car loan? Click here to know more. 

* Terms & conditions apply. Loan disbursal at the sole discretion of HDFC Bank Ltd