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The rationale behind buying a used car is simple. New cars are expensive and hence the value depreciation makes a bigger hole in your pocket. If you are looking for a car that you will use only for a few years, then it does not make a lot of sense to go for an entirely new car. Also, if your motive is to own a car outside your budget, the only way to do it is by going for a used car in good condition.

Hence, the core reason for buying a used car is that the economics are on your side. That said, usually, it makes sense to consider all the options you can use for financing your car. If you have a decent credit score and your car is eligible for one, you should definitely consider a used-car loan. In addition to the benefit of owning your dream car at an affordable rate, you might even get deductions on the income tax you pay annually. But before you set the sail for getting a used-car loan, make sure you have considered these 5 variables:

Things to Know Before Getting Used Car Loan

1. The Interest Rate

Getting the best interest deal for your used car loan is not an easy task. One must do his homework on the various loan providers so that you find a deal that suits your needs. The current interest rates for a car loan for most of the banks is somewhere around 10 to 11%. The interest rates can go up or down if there is a change in policy. So choose carefully

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2. EMI and Loan tenure

Nothing is more peaceful than a clearly laid out loan repayment schedule and the option to foreclose a loan with minimum charges. You can several online EMI calculators to know the amount you will have to pay for each month. Try multiple combinations of Loan Amount, Interest Rate, and Tenure, to reach the most suitable EMI for you.3. 3.

3. Down Payment

Many of the banks will propose 85 to 90% financing on the on-road price of the car. An old or privileged customer may get a full amount financing option. All you need to do here is try to keep your down payment as high as you can afford as it will help in reducing your loan amount and hence the EMIs.

4. Creditworthiness

Check your credit-worthiness by simply checking your CIBIL score. A higher CIBIL score means a better chance of getting your loan approved. One will have a chance of 90% approval of the loan if he/she has a CIBIL score of more than 700.

5. Loan Process and Processing Fees

A car loan provider charges a fee for doing the paperwork and processing your application. This amount particularly depends on the loan amount, the tenure, and the down payment. Try to find information about these charges and select the one which is more suitable for you.

In Conclusion

So what are you waiting for? Go get your car loan and don’t wait buying your dream car. Just consider the above-mentioned points and make your choice accordingly.

1 Comment

  1. Gabriela Bedenbaugh June 3, 2020

    Pretty! This has been an incredibly wonderful article. Thank you for providing these details.


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