The excitement of buying a new car is like a dream coming true. But with this happiness, a question comes to everyone’s mind – “How to manage insurance and EMI?” If proper planning is not done, EMI can become a burden and insurance can also become a headache. Therefore, it is important to manage both of these wisely so that the fun of driving a car remains intact.
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Insurance
Insurance is not just a legal requirement, but it is also a security for your car and your pocket. Imagine, if there is a sudden accident or the car gets stolen, then insurance is the biggest support. Comprehensive insurance policy covers your car as well as third-party damage. On the other hand, if the budget is a little tight, then you can also take third-party insurance, but the cost of repairing your car is not covered in it. Therefore, it is wise to choose the right insurance policy right from the beginning.
Right Insurance Plan
It can be a mistake to focus only on the premium while choosing an insurance plan. One should see what all is covered in the policy. Choosing add-ons like Zero Depreciation Cover, Roadside Assistance and Engine Protection makes the insurance even more useful. It is always beneficial to compare the premiums and benefits of different companies before buying insurance.
EMI
The biggest concern while buying a car is EMI. Many people only look at the on-road price of the car and make mistakes in EMI calculation. While choosing EMI, only 15-20% of your monthly income should be spent. If EMI is eating up a large part of your salary, then later personal expenses and savings may be affected.
EMI Savings Strategy
The higher the down payment, the lower the EMI will be. Suppose the price of the car is Rs 8 lakh and you make a down payment of Rs 3 lakh, then the loan amount will be Rs 5 lakh and the EMI will be easily manageable. Also, the loan tenure should also be chosen wisely. Long tenure reduces the EMI, but the interest has to be paid more. On the other hand, a short tenure saves interest, but the EMI can be a bit heavy.
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Budget Planning
The most important thing regarding insurance and EMI is proper budget planning. Before buying a car, take a look at the monthly budget and decide how the EMI and insurance premium can be managed without any financial stress. If you are already paying personal loan or credit card bills, then it is important to think before adding the EMI of the new car.