A healthy borrowing of auto loans

With auto loans being secured loans where the car serves that collateral the market is pooled with lenders who are ready to lend even for those who have a history of bankruptcy! It is not uncommon to see the “bad credit ok! no credit ok!” banners in most of the lending outlets, but a healthy borrowing of auto loans is just more than what the sales representative has to tell you! 

Let us see, what with auto loans? The typical of auto loans and repayment will extend to a period of 5 years or less.  If you are married and are slowly beginning to start with a family, you need to consider several things before you purchase, especially if you are without children.  May be your wife is just expecting and the lender authorizes your loan because your income-to-expenditure ratio is quite okay.  May be you had to show the salary details of your wife as a co-applicant to support for the loan.

In the above stated example the strategy is simply going to change:-

• When it comes to paying the EMI for the auto loans the lender would have considered your income + your spouse’s income for the repayment!

• After your new kid arrives you need to think that your expenses are going to multiply and in some cases there are chances that your wife might have to break up with her job to baby sit! A reduction of income plus more bills! This is where trouble is going to start and mismanagement is going to set in as bad scores!

In such stances, you may not be able to compromise on getting a car because a car becomes essential with a kid.  The repayment can be manageable if you have a supporting income of your spouse, but you might need to revise your affordable EMI if she is not going to work…such are the many things that we happen to miss especially with auto loans and consumer loans.

Thinking ahead of time about affordability is very important.  Not only should you consider your current affordability to repay your auto loans on time, you need to think through strategies that may show up on the spread of the repayment time.  You need to consider the strategies and decide accordingly! Never hurry up, be wise to save trouble away from you and from your auto loans lender.