With the gradual unlocking of the nation’s market and public places, the auto market is expected to jump back to growth. Simultaneously, the expectation of used car market starting to gain pace also exists. Not many know but purchasing a used car can be significantly financially burdening too, especially with limited income sources. Under such circumstances, one of the best ways to acquire your desired used car is to finance it through a loan for second hand car.
A used car loan is a customised funding option that is tailored as per the buyer’s financing needs, while remaining affordable. When availing the advance, you must, however, make sure that you are well-informed regarding all the essential aspects of the advance. Below are some of them.
Car Model Selected and Its Age
The car model you decide to purchase has a significant impact on the terms at which the lender provides you a loan. Lending institutions provide loans based on the resale value of the vehicle, which makes it essential to consider the car model involved. Usually, used car models that have been introduced lately stand a better chance of receiving lender approval.
Also, used cars usually have shorter service life than new cars, while also being vulnerable to early depreciation. Used cars with shorter service life stand a good chance of not being approved. You must thus take care to select a vehicle with a sufficiently long service life when seeking a loan for second hand car.
Interest Rate Applicable
The interest rate applicable to a loan primarily determines your affordability for the advance, wherein other charges and fees also contribute to the same. It is thus essential to run a market-wide comparison of available lenders to find out the lowest rate available in the market.
You can also leverage your employment and financial standing to negotiate for the best rate with your selected lender.
Also Read: Step Guide to Buying a Used Car in India
Loan to Value Ratio
Secured loans like used car loan also come with LTV or loan to value ratio, which determines the maximum loan availability for an individual as a percentage of the asset’s current market value. In the case of used car loans, LTV can go as high as 75% whereas the individual needs to fund the remaining cost through down payment. You must make sure that the lender provides a high LTV on the used car loan to secure maximum funding as the loan amount ultimately secured will be subjected to the LTV as well as the value of the car purchased.
It is also essential to check that there is sufficient tenure flexibility so that you repay the advance affordably in easy EMIs. With reputed lenders, the repayment tenure for used car loans can easily extend up to 5 years.
Having checked all the essential factors, you can conveniently decide on the most suitable lender to avail a loan for second hand car purchase with. Note that you can avail financing of up to Rs.50 Lakh with reputed lenders to purchase your desired high-end car model second hand.