For most of us, owning a car is a tremendous dream come true. While buying a new car is typically out of reach for most people, used cars can help you achieve your automotive goals.
While most of us are aware that we can get finance easily while purchasing a used car. But an interesting part which most of us don’t know is we can also Re-Finance our existing vehicle or in simple terms, we can get money by hypothecating the car that we already own.
The rate of interest for applying for a used car loan in India is approximately as low as 12%-16%. Based on the borrower’s credit rating, he can take up a car loan for 90% to 100% of the car’s market price while he is buying a used car. Nowadays many public sector banks in India also provide used car loans at an affordable rate of interest. However, while applying for a used car loan, it is critical to check availability and make the necessary safeguards.
However, in certain situations, refinancing your car would be a better option. Refinancing an automobile makes absolute sense when one needs a loan for a shorter tenure for business purposes or for personal use. It is generally cheaper than a Business or a Personal Loan. Also, you can get up to 200% of the car’s value. Refinancing your car is not advisable, if you’re underwater on your current loan, just acquired a new automobile, or your current loan involves prepayment penalties.
What Are The Different Factors Determining The Interest Rate Of Loans?
Lenders constitute different interest rate slabs for used car loans depending on the following factors:
1. Credit Score
A credit score is an important factor that can determine the interest rate of your used car loan is your credit score. A healthy credit score indicates that there is no risk of lending you money since your record shows you have been making timely payments as per your score. To have a lower rate of interest on a car loan, it’s suggested to maintain a good credit score.
2. Relationship With The Lender
It’s important to maintain a good relationship with your lender in terms of transactions as well as payments. Since they might notify if they are offering used car loans at a cheaper rate of interest. Therefore, before approaching any other lender for a used car loan, make sure to consult your existing lender.
3. Repayment Tenure
The tenure of your used car loan will have a great impact on your rate of interest. The individuals opting for a longer tenure, their EMIs would be comparatively lower but they are entitled to pay a high rate of interest throughout the loan tenure. On the other hand, EMIs are higher but the interest rate is low in shorter tenure.
4. Amount Of Loan
The amount taken for a used car loan affects the rate of interest charged on the car loan. Opting for a higher amount of loan might provide you with a lower rate of interest and vice versa. This varies from one lender to the other.
The individuals having income on the higher side might enjoy the advantages of a low-interest rate since a high amount of income indicates a good capacity to repay your debt.
6. Age & Model Of The Car
With a used car loan, the vehicle serves as security for the duration of the loan. If a borrower defaults on a loan, the bank will keep the vehicle to cover the outstanding debt. As a result, while deciding the interest rate, banks consider the car’s age and model. Remember that newer cars from reputable manufacturers have a higher resale value than older models. The interest rate for used or pre-owned car loans is higher than on new car loans. This is due to the fact that antique cars deteriorate with time and use.
Where Can I Get The Best Deal On Used Car Loan?
Ruloans is the place to go if you want to own the car of your dreams. Having well-known Banks and NBFCs as our partners, we offer you affordable finance as a used car loan. Some of our partners even offer you 100% finance. You may choose and compare used auto loan offers from the market’s top lenders. Click here and have access to the best prices available with hassle-free processing, minimal documentation and instant disbursal.
Ruloans is India’s leading financial products distribution company that helps manage your financial needs be it Home Loans, Personal Loans, Loans against Property, Business Loans, Auto Loans, Credit Cards, Balance Transfers, and many more. Our vision is to be recognized for value creation, transparency, and the largest distribution capabilities in the financial industry. We also have an exclusive DSA Partner Program for several professionals to leverage their skills and make the most benefits. Ruloans is present across 1200+ locations with over 7000 employees, consultants, and referral partners. Ruloans association with ~150 financial institutions including banks, NBFCs, and Fin-tech gives a wide choice for customers to choose from. We help you borrow right.