Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply
Quick Links for loans
Quick Links for Insurance
Investment
Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Loan for Vehicle > Difference between Fixed and Floating Rate of Interest for Used Car Loans

Loan for Vehicle

Difference between Fixed and Floating Rate of Interest for Used Car Loans

Difference between Fixed and Floating Rate of Interest for Used Car Loans

Since the pandemic, owning a personal vehicle has become a popular choice to avoid public transport's crowded environment.  However, buying a new car can take a hefty toll on your pocket and quickly exhaust your bank balance. Thus, buying a used car is a smarter solution that can help you save a fortune.

Why should you take a used car loan?

A used car loan can help you purchase a pre-owned car at affordable interest rates along with a flexible repayment tenure. Moreover, you can cover up to 95% of the car’s total value by availing this loan.

The tenure for second-hand car loans can range between 12 to 60 months, and the used car loan interest rates can start at 15%, even lower, depending on your lender. You can apply for a loan to buy a used car online with minimal paperwork. Hence, taking a second-hand loan is perhaps the best way to finance your pre-owned car.

Additional Read: Top Benefits of Used Car Loan

What are fixed and floating interest rates on pre-owned car loans?

A fixed-rate of interest remains consistent throughout the loan repayment tenure and is paid through equal instalments as stipulated at the time of application. What makes this kind of interest suitable is that the rate is not affected by market fluctuations.

On the other hand, the interest rate that changes as per the market scenario is called a floating interest rate. As the name suggests, this kind of interest is volatile and gets revised every time the financial institution's base rate changes.

Read on to know the critical difference between these two ROIs before opting for any one type of used car loan interest rate.

Fixed vs floating interest for used car loan

When it comes to fixed vs floating used car loan interest rates, there are some advantages and drawbacks associated with both. The fixed rate of interest is usually 1 to 2.5% higher than the same lender's floating interest. The fixed-rate cannot be increased or decreased even if the RBI announces a rate cut.

On the contrary, a floating interest rate increases and decreases with the market and is usually priced lower than the former. However, the fluctuating nature of floating rates makes it challenging to set a budget as the monthly instalments may keep changing.

If you are confused about choosing the correct interest type, know that your lender may allow you to switch from fixed to floating or vice versa, even after taking the loan. Lending institutions usually charge a small fee for this conversion. 

Additional Read: 4 things to keep in mind before you buy a second-hand car on loan

Conclusion

Looking for used car loan at attractive fixed or floating interest rates? If so, your search ends at Tata Capital – India’s leading lending institution.

Start by visiting our website to check your used car loan eligibility. After which, you can calculate your potential monthly instalments with us by using our online used car loan EMI calculator.

To know more about our pre-owned car finance options, visit Tata Capital’s website.

Apply Now
Disclaimer

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Important Information

Investor Information

Visit us on:,Visit us on: www.tatacapitalmoneyfy.com,www.tatacapitalmoneyfy.com

Our Private Equity Funds

Amalgamated Companies

Top Branches

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.