Having a low car loan EMI is every borrower’s dream and this is possible. Here are a few factors that have an impact on your car loan EMI -
The amount you borrow determines your EMI amount. If the loan amount is high it may be hard for you to repay your loan.
Credit Score and Rate of Interest
If your credit score is good i.e. above 750 then it becomes easy for you to avail a loan at lower rates of interest and at a repayment term that is affordable. Lower the rate of interest then lower is the EMI amount.
Existing debt is not an issue as long as you don’t have too many loans running at the same time. Not only will it be hard for you to repay your EMI, lenders may also perceive you to be credit-hungry and refuse to lend to you.
The time taken to repay the loan amount is inversely proportional to the EMI amount i.e. a lengthy tenure implies that the EMI amount to be paid each month is lower and vice versa.
But, taking a longer repayment period is not recommended as you will end up paying a higher interest amount overall.
The type of interest rate chosen can have an impact on your EMI. Please note that this is not the same as interest rate calculation. A fixed interest rate will ensure the same interest rate throughout the repayment term. But if a floating interest rate is chosen then your interest rate may vary based on the RBI’s directives and can be lower or higher than expected.
The older you are, the harder it is to avail a loan and this is especially the case if you are closer to retirement age.
If your income is not steady or high then lenders will not provide loans easily. As long as your repayment ability is not assured, you will not be able to avail a loan quickly.
This is also the case with age. If you are closer to the retirement age (~60) and do not have regular income, loans won’t be available as easily.