Used Car Loan - Things To Know
Tips to select the best used car loan
These days, many people prefer changing their old cars every few years. This trend has not only given a boost to the new car markets, but also to the used car markets. A buyer of used cars today has many options to choose from. One can purchase directly from the owners, agents or even certified used car dealers.
Banks themselves acknowledge the boom in used car market and are ready to offer used car loans for purchase of second-hand cars. But generally, availing a second hand car loan is not as easy as taking a new car loan. But that doesn't mean that one should avoid applying for a loan when looking to buy a second hand car. Let's explore few tips that can help you make the most of your car loan application for purchase of a used car.
The first thing to evaluate is the loan amount available. It is worth noting that unlike new cars, where upto 95% financing is available, a used car usually gets upto 80% financing. This means that at least in percentage terms, you will have to shell out more as down payment when taking car loans for used cars. So when applying for such a loan, make sure you have enough money (upto 20%) to cough up as down-payment for the car.
Next factor worth considering is interest rates. In general used car loan interest rates are 3% higher than new car loans. But since final rates are dependent on factors like model and age of car, profile of customer, etc., make sure you pick a car that is neither very old nor has very low resale value. You can even take help of used car loan emi calculator that are available online, to assess your expected EMIs.
Used car loans are generally offered for 3 year tenure. In some special cases, it might go upto 5 years. Banks also keep a condition that age of the used car at the time of loan maturity should not be more than 10 years, subject to maximum loan tenor of 5 years.
Another point worth noting is that it might be a good idea to go through certified used car dealers. These dealers conduct thorough technical due-diligence before putting up a car for sale. Most banks are comfortable financing through these dealers because of their due diligence, which reduces bank's risk substantially.
So don't worry if your budget is not very large. Banks are more than willing to help you purchase a used car. Just make sure that you keep above discussed points in mind to ensure that your used car loan application is processed successfully.
Visit tatacapital.com/cars to know more.
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