Having a car in today’s age has become a necessity rather than a luxury given the fast paced life and the need to commute easily. Though cab rental services are available, having your own car is better and more convenient. Moreover, the small car market is booming giving you affordable cars which are not too hard on your pockets. However, many still wonder, is buying a car better or renting it?

 

 

Let’s analyse the pros and cons of both buying vs renting a car –

 

Pros and Cons of buying a car

Pros Cons
Travel at your own convenience Considerable funds needed to buy a car
Ease of multi-destination trips Insurance premium expense
Instant availability Servicing costs and pollution checks

 

Pros and Cons of renting a car

Pros Cons
Utility of time Might not be available instantly
No need to drive in traffic Not cost-effective for regular commute
Car rentals are easily available for self-driving Rentals can be expensive

 

Though both buying and renting have their respective pros and cons, owning a car is always better and if you can afford it you should buy it.

 

Financing a car

Now that we know that buying a car is better, the question arises – How do you finance it? The answer is easy – through a car loan. If you don’t have sufficient savings at your disposal, you can always opt for a car loan. The loan is available for up to 5 years at an affordable rate of interest and allows you to finance your car easily.

 

What is a car loan?

A car loan is a loan which is offered by banks and non-banking financial companies to buy a car. The loan is offered for up to 90% of the car’s value and the remaining should be paid by you as down payment. The loan is secured against the car that you buy and has a low interest rate. You can repay the loan over a period of 5 years in affordable monthly installments. Prepayment facility is available under the loan wherein you can prepay the loan partly or fully if you get surplus funds.

Here is a free car loan calculator to calculate EMI for your car.

 

Why you should opt for a car loan?

A car loan makes sense because –

  • You don’t have to put a dent in your savings
  • It is easily available to finance your car
  • The repayment period is long and flexible
  • There are usually no prepayment charges
  • You can build your credit score if you repay the loan on time

Things to remember when opting for a car loan

Though a car loan is a beneficial way to finance a car, here are some important things which you should remember when availing the loan –

  • Shop around and choose a loan with the lowest interest rate
  • Keep your documents handy when applying for the loan
  • Understand the terms and conditions of the loan before you apply for it
  • Understand and calculate the charges associated with the loan
  • Don’t forget to get the car insured

Here’s a complete guide on how to manage your debts effectively

 

What is Car insurance?

When you buy a car, you need to buy a car insurance policy with it as well. The Motor Vehicles Act, 1988 mandate every car in India to carry a valid third party liability insurance cover on it. This cover is needed against any third party liability which you might incur if there is an accident and an individual is hurt or his/her property is damaged by the car.

Though a third party liability policy is mandatory, it does not cover the damages which your car suffers in any accident or if the car is stolen. In such cases too you suffer a financial loss. This financial loss can be covered by a comprehensive car insurance policy. A comprehensive policy is one which covers both third party liabilities and the damages suffered by the car thereby giving you an all-round coverage.

 

Which car insurance policy is better?

When comparing between third party and comprehensive plans, the latter wins hands down. A comprehensive policy is always better than a third party coverage because –

  • It offers a comprehensive scope of coverage
  • Theft of the car is also covered by the plan
  • There are various add-ons which enhance the coverage further

Add-ons available under comprehensive car insurance plans

As stated earlier, comprehensive car insurance policies offer a range of add-ons. Let’s have a look at some of the most popular add-ons which are available –

Name of the add-on Brief description
Return to invoice Pays the invoice value of the car in case of total loss or theft
Roadside assistance 24*7 assistance if the car breaks down in the middle of the road
Zero depreciation No deduction for depreciation in the case of claim
Engine protection Coverage against engine damage due to water-logging
Personal accident for passengers Personal accident cover for the passengers travelling in the car
Voluntary deductible Premium discount if you choose to pay a part of the claim yourself
No claim bonus protection Protection of the no claim bonus even if a claim is made
Accessories cover Cover for the accessories of the car in case of damage

 

So, if you want to commute hassle-free, invest in your own car. A car loan helps fund a car and is also affordable. When buying a car do opt for a comprehensive car insurance policy for a wide coverage against possible damages and stay financially protected. For a more comprehensive guide on buying and insuring your car, take this course on financial planning and get a better understanding.

 

Download a FREE Financial Planning Guide

 

Financial planning guide

Share this blog: