Second hand car loans have been a convenient addition to the vehicle financing segment, simplifying and enabling car ownership for households across income categories. Their easy availability and simple eligibility requirements mean quick loan application, processing, and approval too. Availing used cars finance comes with its share of challenges too though if you are not suitably eligible or have selected a car that does not stand up to the lender’s risk bearing capacity.
It is, however, not much of a challenge to navigate these hurdles to avail easy funding. For doing so, you must be well-informed about the loan option available. The essential aspects would revolve around how much loan is available, how much you should borrow, what down payment requirements are needed, interest rates applicable, and such factors. Let’s check them out one by one.
Affordable EMI-based Financing
Used cars finance is designed as a simple EMI-based funding option for better affordability of the advance and certainty of the repayment value. Under this loan option, the lender assesses your financing capacity and approves a loan as per that. The total repayment liability comprises the loan principal and the interest accrued as per the applicable rate.
The total liability is then divided into equated monthly instalments payable every month until the tenure’s end, enabling easy repayment of loans for second hand cars on EMIs. The affordability thus primarily depends on the loan amount and tenure you select for repayment.
High LTV of the Advance
As a secured loan arrangement, a used cars finance is extended under the LTV-based arrangement. Under this, only a certain percentage of the asset is financed as loan and the remaining needs to be paid upfront as down payment through self-financing. The lenders, however, provide high LTV or Loan to Value ratio on these loans, going up to 95% of the vehicle’s cost. As a result, borrowers need to finance only a small percentage of the car’s cost through self-funding.
The maximum a down payment requirement for availing a used car loan can go up to 20% of its cost. Nevertheless, it may not be ideal to finance the entire available funding as loan to meet the cost of your car purchase. Low dependability on loans for big-ticket purchases indicates disciplined borrowing habits, thus gaining a lender’s favour.
Financing Available for All Car Types and Models
You can finance a second hand car on EMI irrespective of the car type, brand or model you select. Thus, whether it is a SUV, a Hatchback, a Sedan or an MPV you are eyeing to purchase, all you need to do is find a suitable lending institution for the purpose. Also, you do not need to worry regarding the car brand or model as well. The widespread used car market allows you to pick the latest car models as well at decent prices. You can then apply for a loan with your selected lender for the purpose.
Flexible Tenure of up to 5 Years for Repayment
Now, pay for your used cars finance in your suitable tenure based on your overall affordability of the advance. Reputed lenders provide financing for up to 5 years so you can easily manage your EMIs for the advance. However, when selecting a long tenure, you must be ready to dish out a few extra bucks as well since an extended tenure always invites higher interest payouts than the shorter ones.
You may compare the available lending institutions in the market to find out the best lender for your used cars finance. Check out the applicable approval and disbursal duration so you be assured of how much time it would take to complete financing and take home your desired car.