Used automobiles are now a feasible alternative for many individuals due to the phenomenal growth of the Indian used car sector in recent years. Going with the used-car option might enable you to get the automobile of your dreams without having to go over your budget if your ideal vehicle is out of your price range. Additionally, purchasing second hand cars on EMI plan will help you better manage your money.
The convenience of travelling in a four-wheeler and the ability to save some money on the market price, depreciation, and even insurance for the automobile make purchasing a used car a more cost-effective option than new car purchases.
Here is all you need to know about obtaining a loan against used car if you also intend to purchase a used vehicle.
What Is a Used Car Loan EMI?
When you apply for a used car loan you have to pay back the loan amount during the repayment period which is known as your EMI (Equated Monthly Installments). You can calculate the monthly cost of your used vehicle loan with the free online loan EMI calculator. This calculator may be found on the bank’s website as well as third-party comparison websites. The tool’s operation is straightforward.
To calculate the EMI, input the loan amount, interest rate, loan tenure, and processing fee. You may experiment with different used vehicle loan interest rates to see how they affect the EMI.
Why Buying Second-Hand Cars on EMI Is a Good Option?
Buying second hand cars on EMI has many perks. For starters it allows you to buy the car of your choice without breaking your long-term savings. Other than that the benefits of getting a second-hand car on EMI include:
- Some lenders could finance between 95% and 100% of the price of your automobile, which means you can increase your budget.
- If you often travel for work, you may borrow a used automobile and deduct the cost from your taxes.
- Given that used automobiles are less expensive than new cars, you will ask for a lesser loan amount, which will result in reduced monthly payments.
- They are practical and simple to access. Apply online for a used auto loan with little paperwork and receive speedy approval.
Things to Keep In Mind Before Applying for a Second-Hand Car Loan
When choosing a loan against used car, there are various considerations that one should make. Let’s look at them now:
- Verify Your Credit Score: Before applying to a lender for a used automobile loan, you should verify your credit score. By being informed of your credit score you will have fewer chances of your loan getting rejected.
- Know the Appropriate Loan Amount: You should make sure of the amount of the loan that you need. Remember that a larger loan amount means a higher EMI. Therefore, try to keep your loan amount as small as possible.
- Examine the Interest Rate: Interest rates on used automobile loans vary from lender to lender. So we advise you to explore different lenders and choose the one that offers you the lowest rate of interest.
- Understanding the Car’s Value: Before applying for a used car loan, you must be aware of the value of the vehicle. You won’t have to spend too much on the car because of this.
- Organize the Down Payment: Lenders often provide loans for old automobiles up to 80% of their market value. You are required to make a down payment on the balance. You can lower your monthly payments by raising this down payment amount.
- Choose a Shorter Term: Despite somewhat higher EMIs, choosing a shorter term might benefit the borrower in the long run. Shorter terms will help you save money on interest.
- Keep all paperwork Ready: For pre-owned automobile loans, lenders require a few simple pieces of documentation. PAN cards, Aadhar cards, voter identification cards, bank statements, pay stubs, automobile registration certificates (RC), and insurance copies are a few examples.
Conclusion
Though the demand for personal transport has increased in India, still many people are not able to afford it. But with the help of a loan against used car, you can bring your four-wheeler home.
The ideal option to purchase a used automobile is by getting second hand cars on EMI, but make sure you do your homework thoroughly to discover the best loan offer for your purchase. Doing research will help you get the best offers and save you a lot of money on interest.
