Owning a car, which used to be a luxury a couple of decades ago, is now a basic necessity- as basic as your roti, kapda and makaan. And with easily available car loans with attractive features, the general mindset is: why wait to save enough to buy one, when you can own one on borrowed capital and repay it slowly at your own pace in equated monthly instalments?

But, while a house, jewelry etc are assets, as their value appreciates with time, a car, though perceived as one, isn’t actually an asset as its value depreciates with time. It is possessed more for convenience, and for some, it is a status symbol. Hence it is important to carefully consider the utility and the benefits before purchasing your vehicle, especially if you plan to fund it through a loan. Do keep the following points in mind –

• Even if you can afford to, do not apply for a very huge loan which would result in a huge monthly EMI outgo and leave no liquidity in your budget to accommodate any extra unforeseen expenses.
• Always try and repay your loan as soon as it is feasible.
• While exploring loans from different lenders, do not just compare the interest rates. Look at the total cost in hand- including the processing fees, the repayment penalty etc.
• Opt for loans of shorter tenures, as the cost in hand would be lesser.
• Many banks have special arrangements with specific car dealers and offer special rates to their customers who hold a savings a/c with them. Do check out for such offers.
• Apart from these, car dealers also offer seasonal discounts and freebies- during important festivals like Diwali, or towards the end of the financial year in February and March every year. Sometimes the freebies are quite attractive like a free stereo, 0 % EMI, free car servicing offers and deep discounts on exchange offers. It is advisable to make use of these.
• Do careful research before finalizing on the loan. There are useful websites like bankbazaar.com and carwale.com which give an exhaustive comparison.