Important thing you need to know to buy a used car on finance
How to buy a used car on finance?
Want to buy your dream car? But you are thinking about the overall budget . Don’t worry I am here to give you the details regarding this topic. Please read this carefully before buying a used car on finance. Hope It’ll help you to understand the whole procedure.
Whether it is a new car or a used car, it is a huge expense for every buyer. It needs to be planned before buying a car. You need to get all details before buying a car like Loans, interest rates, the exchange value of the used car, etc.
Second-hand Car Loan Offline Procedure:
- Visit the nearest branch of your preferred bank.
- Fill out the application form.
- Submit a photocopy of all the needed documents.
- Post submission, the financial institution representative will check your eligibility.
- If you are eligible, make sure you discuss the interest rate and loan terms before accepting the offer.
- Once you accept the offer, the amount will be disbursed shortly.
Second-hand Car Loan Online Procedure:
- Visit your preferred lending institution’s website.
- Go to the second-hand car loan page and click on the ‘Apply’ tab.
- Fill in your details and submit a soft copy of your KYC documents and income proof.
- Post verification, the lender will make you a personalized offer.
- Once you accept the offer, the second-hand car loan will be disbursed to the seller’s account.
Different Types of EMI Options for You to Buy a Used Car on Finance:
Every bank or financial institution has two types of EMI methods. You have to choose one of these two EMI methods. One is standard EMI and another one is structured EMI. Read on to know more about these EMI options.
What is Standard EMI?
Under this EMI arrangement, the interest and the monthly obligation remain constant throughout the used-car loan tenure. This EMI option is perfect for you if your income is unlikely to change in the future.
What is Structured EMI?
If you want to go for a structured EMI, your EMI usually starts low and steadily climbs over the loan term. This is the ideal option for those who expect their earnings to rise in the future.
How to Calculate Second-hand Car EMI?
If you think to take a car loan to purchase a used car then it’s a great idea to calculate the amount you need to pay each month as EMI towards its repayment. To calculate the EMI, you just need to enter the loan amount, the interest rate, and the loan tenure on the EMI Calculator tool. Once you enter these details, the tool will calculate the EMI and display it to you along with the total interest payable and the total cost of the loan.
You can also calculate it use the mathematical formula, which is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where P means principal loan amount, R means the used-car loan interest rate, and N means second-hand car loan term.
Is there any difference between a used car loan and a per-owned car loan?
The rate of interest for a per-owned car loan is slightly higher than for a car loan. Used car loans are often more expensive because of the car’s depreciation, the lower value, and the higher potential for mechanical problems. Car loans in India are currently available at interest rates starting from 7% per annum, while per-owned car loans start from 10% per annum.
What is good interest rate for used car?
It varies bank to bank or different finance company.But the average auto loan rate is 4.33% for new cars and 8.62% for used cars, but check around to get the best deal.
Is it good to buy used car on loan?
It’s obvious that the cost of a used car will be lower than the actual price of a new car which means the cost of insurance will also reduce. If you purchase a used car on finance then the borrowing amount will be lower and the repayment terms will be flexible. You will have a tenure of 60 months to make the repayment of the loan. It’s a great thing for you if you think to invest a amount on a second hand car.