Judging the right time for buying a car can be difficult. You want to be sure that you can afford it; not just now, but in the future too when your requirements only grow bigger and bigger. If you are retired, your income will go down considerably, which means that you need to be extra careful while planning.
Top 10 Options for Pensioners Financing a Car
1. Lease Purchase
This is one of the best options for retirees to finance their car loans. Here, you pay a small monthly EMI towards the car’s depreciation, whereas 30% of it goes on reducing your outstanding balance.
2. Personal Loans
Whether you are retired or have at least 10-15 years before retirement, you can opt for a personal loan. If you do not want any burden of monthly EMI’s or have taken a home loan, then you have to go for personal loans.
3. Car Loan Against ULIP
If you have an insurance plan with your loved ones, this option is perfect for you, even if they are not very close relatives. If they are financially sound and reliable, it could work out in your favor.
4. Auto Equity Loan
If you own a bike or any other vehicle which has depreciated, you can avail of an auto equity loan and buy a car. You can consider this option too if you want to avail of monthly EMI’s, and the interest will be taxed under 12A.
5. Car Loan Against Fixed Deposit
If you have a fixed deposit of more than 1 lakh with your bank, you can use it as security for the car loan. However, there is no benefit on interest or tax deduction here. You can also opt to buy Personal Loan Insurance from some insurers to get this covered.
6. Car Loan Against Post Office Savings
This option is only applicable to those who are not aware of how much interest they are getting on their savings account. Here, they can use the money in their post office saving account as security for the car loan.
7. Car Loan Against Life Insurance Policy
If you have a life insurance policy, you can use it as security for the car loan. If you do not regularly pay towards your insurance premium, this is a good option to finance your car loan.
8. Retirement Benefits
If you are retired and getting income from other sources like PPF, EPF, NPS, etc., opt for this and get your car financed.
9. Personal Loan for Self Employed
If you are not retired and still working, opting for a personal loan is the best option to finance your car. It will give you enough time to repay it and get EMI’s, in addition to deduction in tax under Section 80C.
10. House Rent Allowance
If you are employed, and your employer gives you house rent allowance (HRA) with your salary, opt for this financing for your car loan. It can be an ideal option as it gives you tax benefits too.
According to Lantern by SoFi, “Lenders may work prepayment penalties into your contract in a couple of different ways.” To learn more about paying off your auto loan early, give them a call today.