Why you should take floating rate option for car loan, know here
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New Delhi: Everyone dreams of having a car of their own, a house and adopting a good lifestyle to live in. Nowadays people’s purchasing power has increased and after the lockdown, the recent auto sector sales figures are also indicating that people are once again coming forward to make the car market buzzing. The increasing number of auto loans also assures that the automobile sector is now seeing improvement.
However, there is often a question in the mind of people regarding auto loan or car loan that what rate (floating or fixed) auto loan should be taken from the bank so that the EMI of their car does not become a burden on the pocket. An attempt is made here to answer this question.
Benefits of taking car loan on floating rate
At this point of time, the main advice being made is that you should go for floating rate option for car loan or auto loan. We are saying this because there has been a fall in interest rates recently and there is hope of seeing a fall in interest rates going forward.
Know about Daily Reducing Balance Loan
In any daily reducing balance, interest is charged on the balance remaining at the end of that day and calculated for the entire month. That is why you are told that you should pay the EMI of your loan at the beginning of the month itself, which gradually proves to be beneficial. If you pay EMIs on the last days of the month, it can also have a negative impact on your loan installment. It can be understood from such an example that the EMI of 31 days month will be less as compared to February because it has fewer days. Since we are currently living in a time of declining interest rates, it is advisable for you to go for a floating rate loan as compared to a fixed loan.
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Car loan Information:
Calculate Car Loan EMI
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