Buying a car, especially your dream car is an achievement itself. Your love for cars, be it an SUV, a hatchback, a sedan, or even a sports car deserves its share of attention too. So all you need is a smart financial plan that can turn you from being an onlooker to putting you in the driver’s seat.
Here’s what you can do to bring home your dream vehicle while managing your finances like a pro.
Save Towards Your Car Purchase With The Help Of An SIP
Start by selecting the car you want to buy based on your preference and budget. Divide its price tag by the number of months within which you want to bring the car into your garage. Armed with this calculation, begin saving for your big buy by investing in mutual funds via an SIP. A Systematic Investment Plan helps you invest small amounts every month and gives you hefty returns in just 3 to 5 years. Use an SIP calculator to work backwards from the amount you want to save to know how much you should park aside every month. Usually, SIPs have given investors a return of at least 12% to 15% on maturity. The plus point about an SIP is that though it is linked to the market, it makes the most of rupee cost averaging to give you consistent wealth growth.
Invest Your Yearly Bonuses In FDs Keeping Your Dream Car In Mind
Apart from your regular salary or business income, you may have other sources of income or earn extra cash thanks to a paying hobby, bonuses, cash gifts or an inheritance. Instead of spending these funds without a thought, save all this excess to build a corpus for your car purchase. You can accumulate these extra earnings in your savings account and then start an FD. Decide the tenor for your FD based on the timeline of your car purchase, so that you do not have to delay your purchase by even 24 hours! The key here is to find an issuer who offers you an FD with high interest rates and has a high safety rating so you can get guaranteed results safe from market fluctuations.
Choose A Secured Car Loan And Buy Your Dream Car Right Now
One of the most convenient ways of raising finance for car purchase is using a car loan. Unlike personal loans, car loans are secured loans as the lender sanctions you an amount using your new car as security. Though you can get such loans via the dealership itself, be sure to shop around to find the most affordable one. The best thing about this loan is that it may get you a higher amount on a more competitive interest as the lender can count on your car as collateral.
Borrow Funds Through An Unsecured Loan To Pay For The Purchase
If you do not want to delay your car purchase and can’t wait to drive off into the sunset, consider taking a quick and instant personal loan. Since this is an unsecured option, the interest rate can be higher than secured loans. However, armed with a good credit score and sufficient monthly income, it will be easy for you to get a good personal loan deal. Just work out your monthly budget and use an EMI calculator to choose the right tenor. This way you will be able to pay off your EMIs on time and boost your credit score even higher.
Whether you choose to use an investment, take a loan, or work with a mix of the two, following a disciplined financial plan is key to driving away in your dream car sooner than you think.
The writer is CEO, BankBazaar.
BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for credit card, personal loan, home loan, car loan, and insurance.