Posted onNovember 7, 2022
How To Get A Used Car Loan For A Great Interest Rate?
- How to Get a Used Car Loan at a Great Interest Rate
- – Down payment
- – Credit score
- – Debt-to-Income ratio
- – Loan tenure
- – The car’s age and model
- – Choose the Best Loan Provider
Most individuals find it good to buy a used best mileage car in India to improve their driving skills. Also, many of us consider affordability. Fortunately, used Car Loans are available against easy eligibility criteria with various financial institutions.
A used Car Loan is the most convenient financing option to fund a car. These Car Loans can cover various cars, MUVs, SUVs, etc. You can buy a high-end used car for the same price as a new car with moderate features. It can finance specific models of cars with up to 95% of the Insurance Declared Value (IDV) of the car.
The interest rate is one of the primary factors a buyer considers before deciding on a loan. Thankfully, used Car Loan interest rates are lower compared to unsecured loans.
How to Get a Used Car Loan at a Great Interest Rate
A used Car Loan interest rate depends on various factors, like age, model, etc. The interest rate on a used Car Loan may be higher than that applicable on a New Car Loan. Let us explain the factors to consider before getting a Car Loan for a used car.
– Down payment
Lending institutions offer lower interest rates to the borrower if they make high down payments. It will decrease the principal amount, the interest rate and the Equivalent Monthly Instalments (EMIs). This will give you a headstart on the loan approval.
– Credit score
Your credit score is the biggest factor considered during the used-Car Loan application. It tells about your creditworthiness. A credit score of 700 and above shows your high creditworthiness to repay the loan. In contrast, a low score can increase your loan interest rate. That’s how it affects your car loan’s interest rate for used cars.
– Debt-to-Income ratio
The debt-to-income ratio helps determine the borrower’s loan repayment capability. Therefore, loan providers must consider setting the used Car Loan interest rate. A high debt-to-income ratio increases the chances of loan rejection. Otherwise, you will get a loan with a higher interest rate.
– Loan tenure
Stretching the loan tenure can decrease your monthly payments, but you will have to pay more in the long run. Annual percentage rates of a loan are based on market forces and the risk taken. A long-term loan increases the default risk for lenders, and the borrower will be charged a higher loan rate. Therefore, you should apply for a shorter loan tenure. Thus, you can finance your desired used car with the flexibility of EMIs you can afford.
– The car’s age and model
If you want the best-used Car Loan interest rate, consider the model and age of the used car before finalising. The loan provider will seize your car if you cannot pay timely EMIs. Therefore, it is crucial for lending institutions to check the age and model of the used car. Suppose the model you chose has been discontinued, the lender will levy a high-interest rate. There will be a low-interest rate on newer cars. If you select a car from a reputed manufacturer, the interest rate will also be low.
– Choose the Best Loan Provider
It would be best to approach the right lending institution to get an attractive interest rate on a second-hand Car Loan. Few leading NBFCs like Muthoot Capital offer used Car Loans at a lower interest rate.
Salaried and self-employed individuals can get a used Car Loan at a low-interest rate. With Muthoot Capital, you can experience simple and faster processing. Also, the repayment tenure is flexible. You can repay your used Car Loan in a convenient loan tenure as per your financial ease – between 12-60 months.