There is always a steady market for used cars in every automobile industry. The inclination of buying these second-hand cars is mostly among people who are buying vehicles for the first time.
This niche of second-hand car buyers is actually well aware that their first cars would go through some rough phases. Hence, they do not prefer to make huge investments in buying a new car. Loan for used car option serves as an additional encouragement for them by helping them buy used cars on EMI schemes.
However, it would be best if you consider a few factors for availing second-hand car loan.
Check out the following:
1. Interest rates
While buying a used car on EMI, the first thing that you must be aware of is the interest rate. Generally, banks and other financing institutions charge higher interest rates for used cars.
However, some financing institutions that dedicatedly finance the purchase of used cars offer reduced interest rates and attractive schemes. So, find out such financing firms, use the used car EMI calculator provided by them, and know about the interest rate they will charge for the car you have streamlined.
2. Sanctioned loan amount
If you think your financing institution will give you 100% financial support for buying the used car, you are wrong.
These firms use their dedicated calculations and evaluate standards for calculating the loan to be sanctioned for different used cars. Similar metrics shall be applied for the used vehicle you have selected.
You can draw a straight calculation from here; you will have to pay some amount from your pocket along with the sanctioned amount for buying the car.
Nevertheless, this loan amount on used car varies from one financing institution to the other. Therefore, it is better to talk to your car finance company and know about the loan amount they would give you.
When you have information on the loan you will get, it will help you understand how much money you have to give from your savings.
3. Loaning period
The period until which you will have to pay the loaned amount for your used car is crucial. So, get this information. It will help you decide how much extra you will pay for this used car as interest for the entire tenure.
The tenure of the loan period will also help you plan the purchase of your second car too.
Generally, the minimum loaning period for your car is five years. The principal amount and the interest calculated on your second-hand car loan will be divided into EMIs that span for these five years.
However, the loaning period can expand beyond five years too. In this case, your financing institution will calculate the principal amount and the interest based on your loaning period.
Here, let us tell you that you have to pay a greater amount as EMI when you opt for a shorter loan period. But you will eventually pay less interest.
Just the opposite happens when you choose an extended loaning period; you pay less EMI throughout the tenure but end up paying more interest for the used car at the end of this loaning tenure.