Everything you want to know about used car loans

While buying a brand-new car is an ever-wanted dream for most of the people out there, not everyone can come up with the finances to buy their dream car. Sure, with the availability of the great range of car loans in the market, buying a brand-new car has become easier than it was before. But, not all of us can afford a car by giving high EMIs and interests that arrives with the Auto loans. This is the reason that the used car market is on the constant rise. If you’re among those people who are searching for used cars in the market at a low price by availing the used car loan, then you’ve arrived at the perfect place. Here, we are going to discuss various possibilities regarding used car loan and how you can apply for the one you want to buy. But, before we start, let us have a clear idea about the used car loan.

In today’s market, availing a loan for a used car has become a lot easier than it was before. The ease of availability of the loans for the second-hand cars with the various options of buying has helped in raising the used car segment exponentially in the market. Let us go through some of the basic queries regarding the differences between a used car loan and a new car loan.

What is the main difference in between a used car loan and a brand-new car loan?

The loans that are provided for the second-hand cars can differ than the new cars. The primary difference between a used car loan and a new car loan is that the car model plays a vital role in the determination of the financial issues of the loan. With the interest rates on the used cars differing around usually about 3-4% more than the new car loans, the loan provided to buy a second hand car also ranges from 60% to 80% of the price of the car.

Some important points to consider before applying for the used car loan

  • While there are lots of things to consider before you avail a used car loan, the most fundamental factor while determining the creeds of a loan is the age of the vehicle and the model number.
  • If the vehicle model does not exist in the market anymore or has been completely pulled off the market by the manufacturing company itself, then your opportunities of availing a loan greatly reduces. In general, the age of the car is a prime factor in determining the availability of the loan and it must not go beyond seven years.
  • What it concludes is that if the car itself is 3 years old, then the maximum timeline of availing the loan for the car will be 4 years. However, it’s rare to find a car loan of the vehicle that is already 4-5 years old.
  • A margin of ₹ 25000 is kept aside for the registration, insurance, and the various accessories charges while assessing the total value of the car. After the valuation is determined, the banks finalize the amount of loan that can be sanctioned for the car.

How can you apply for the car loan?

It is easy to apply for any used car loan through online banking. Most of the banks out there offers a lucrative range of loans that are made especially to cover all the requirements for any customer. You can apply for a used car loan of your personal choice by making correct searches online and there are various websites available on the internet to compare between various loans.
So, to apply for a used car loan, just follow these simple steps,

  • Go to the respective bank’s website, and click from one of the various options available.
  • After selecting options, you can compare those with the options available and check whether it fits your financial criteria. You can also check various parameters like eligibility, the amount of money that can be borrowed etc. Once you have set the parameters, click the ‘apply now’ option to avail the loan.
  • After you’ve submitted your online application, the bank will send you an e-approval form, which you need to send back to the bank. A representative from the bank will arrive, and after completing certain formalities, you can get your loan update by SMS or emails.
  • Application for availing a loan through a bank is safe and also beneficial as the rate of interest offered by them is slightly lower.
  • The final interest rate which you will get usually counts on how good is your previous credit score and your relationship with the giving bank.
  • Used car loans generally come along with the processing fees of 0.5% of the total loan amount.
  • When compared to the loans availed for the new cars, it is naturally easier to relinquish on the prepayment drawbacks on the second-hand car loans, if you decide to close the loan that you took in advance.

The greatest difference between the two loans is the rate of interest. Of course, if the rate of one loan is lower than the other you can pay the lower interest loan faster. You have less choice to select between the variable and the fixed rates on the second-hand car loans. A varied rate can cost you less money and you can also pay the entire loan at a minimum amount of time.

If you’ve decided to buy a new car, or maybe it is your first car, you will certainly look for the best loan available in the market. Most of the people start by availing the personal loans or used car loans for the purchases they are about to make. Then what is the alteration and how will you decide what is the correct option for you?

Before you make any specific selection of the car you are about to buy, you can check online for car loans. Just make sure that you know every specific detail and requirement about the loan you are going to apply. This means, if you’re willing to buy your car before applying for the loan, you have to make sure that it fits well within the specified parameters given by the lender. For example, some car loan providers may want that the car can be driven for a limited number of KMs. There can also be restrictions regarding the selection of the vehicle.