It is a good idea to pay-off your debt on car loan beforehand, so that it does not pile on, along with future expenditures. Prepayment of your car loan brings you manifold benefits.
Some of the benefits of availing car loan pre-payment
option include:
Escape paying the rate of interest of future EMI's
A large sum of your monthly income, which will be paid as EMIs towards the car loan, can be saved if you prepay the loan. This free money can be invested in more lucrative investment arenas that are available in the market. It also reduces the burden of the total interest to be paid back on the loan otherwise. Once you are rid of the debt of the loan, the additional amount you are required to pay as interest amount on the loan will cease to prevail.
Prepayment adds to your credit score
Paying off your loans helps you to clean your portfolio of debts and increases your credit score. Timely or pre-payment of loans adds to your credibility and reflects your ability to deal with liabilities. Your credit score can help you to secure another loan in the future, if the need arises. A positive credit score boosts your reputation and signals financial stability.
Save the car’s insurance coverage amount
Lenders require you to have a certain level of insurance cover on the car that has a lien on it. You can save a good amount of money on your car insurance cover by prepaying the loan, especially if the car is older or in poor condition. Once you pay off the car loan, you have the flexibility and liberty to change your car insurance coverage according to your needs and financial convenience.
No comments:
Post a Comment