You must have fantasized about owning a car at some point in your life. But then you face reality and learn how expensive cars are. To realize your desire to acquire a car, you can, nevertheless, apply for a car loan. However, the interest rate on the car loan may lead you to pause. But, have you considered loan against used car loan?
.Even if you can afford a car, you can decide against buying one. It makes perfect sense to not spend all of your savings on a car and that you would rather have the money on hand in case of an emergency. However, the fact is that every used car has its own set of issues, even though one of the main drivers of the used car market’s expansion is consumers’ inability to buy new cars. One of them entails taking out a loan on the aforementioned car, which might not be as inexpensive as it appears on paper.
Things to Consider Before Applying for a Used Car Loan
Before you proceed with borrowing money to purchase that old car, keep the following in mind:
1. Loan Amount
While some banks will lend you the full cost of the car, the majority will lend you up to 90% of the on-road price for a new car. However, the loan amount for your old car loan can be limited to 80% of the car’s value. Additionally, there can be extra eligibility requirements for a loan against used car that are higher than Rs 5 lakh.
2. Loan Term
The loan term varies from three to five years for all used cars, but it can go up to seven years for a new car with some lenders. The used car’s age will also be a factor in the selection process. For instance, only used cars that are eight years old or later are eligible for loans from one of the public sector financial institutions.
3. Interest rate
The buyer of a new car has a big advantage over the buyer of a used car loan in this situation. While interest rates on new car loans can range from 8% to 14%, those on used car loans will typically range from 9% to 18%.
4. Checks before a used car loan is disbursed
Unless the vehicle is brand-new, you might need to make sure that the supplementary conditions of the loan lender are met. These might involve getting Credit Information Scores (CIC), income invoice price of the car, and similar things. You must check the loan processing, pre-payment periods, default penalties, and other details as each lender may have a different policy on these. Also, to be sure your money is being used wisely, try to get a six-month or buy-back warranty on the same from individual sellers.
Benefits of Getting a Loan Against Used Car
There are many advantages to financing your used car purchase. The price of the car will be reduced, which is one of the main advantages you will enjoy. A secondhand car will always be less expensive than a new one. As a result, your loan’s principal will be less. Your car loan’s interest rate will therefore be reduced.
You can still take advantage of car loan tax exemption if you use a loan to acquire a used car. You must keep in mind, though, that Section 80E of the Income Tax of India Act only applies to cars used for business purposes when you qualify for a car loan tax exemption.
Used Car Loan Calculator
You may determine the EMI that you will have to pay toward the principal and interest of your loan over the loan period by using an EMI calculator for used cars. You can choose a suitable term to comfortably pay off your used car loan by using an EMI calculator. To avoid missing payments, the calculator makes it simple to schedule your monthly installments.
To calculate the estimated amount, you may also need to enter more information into the used car EMI calculator, such as your salary, personal information, and the loan processing charge. However, the predicted cost would typically not deviate significantly from the actual amount.
Benefits of An EMI Calculator
- A used car EMI calculator is a very simple and handy tool. It can swiftly do calculations and give a summary of the used-car financing possibilities offered by various lenders in the market. The tool is made so that you only need to enter values in the appropriate areas and press Enter; the result will appear on your screen in a matter of seconds.
- Not only is a second-hand car EMI calculator a free tool, but it also allows for unlimited usage. You can perform extra calculations if the present offer does not satisfy your needs for a certain aspect of the loan plan, such as the lowest interest rate. To calculate the EMI, simply enter the interest rate, loan term, and loan amount. Before approaching a lender, you can experiment with different numbers for the loan amount and tenure to find your perfect EMI choice.
- Used car loan calculators usually offer accurate results, just like regular calculators, in contrast to manual calculations that are prone to errors. You can always manually recalculate your preferred loan amount and tenure if you are unconvinced by the findings shown on the screen of your technological gadget. Even so, it would still save the time and work required to manually calculate various combinations.
Conclusion
Anyone can now realize their dream of having a car thanks to the availability of loan against used car. To select the finest used auto loan, it is crucial to evaluate loan offerings from various lenders.
Before you opt for a used car loan, it is a smart idea to determine how much you have to pay each month as EMIs towards its repayment. You only need to enter the loan amount, interest rate, and loan tenure on the second-hand car EMI calculator tool to determine the EMI. The tool will calculate the EMI once you enter the information and display it to you along with the entire amount of interest that is due and the overall cost of the loan.