The Right Way To Take Car Loan For Used Cars

There are many individuals who would like to purchase a car when they receive their driving license. However, there are several factors that influence the decision of buying a car. In this article, we give you the right way to take a car loan, especially for a used car.

Manufacture year and model of car

The age of the car and the model of the car play an important factor in the decision of the car loan. If the car model has been phased out of the market, it mostly won’t be supported financially especially when deciding for the car loan. Normally, the age of the car and the tenure of the loan are combined together and generally should not exceed more than 7 years. Therefore, the older the age of the car, the less is the tenure of payment. Therefore, if you are getting a car that is more than four years old, you will most likely not receive a car loan.

Interest rates

Normally a bank sends in a valuation expert to calculate the value of the car once you have decided to purchase the car. Based on certain factors like the current condition of the car, number of kilometers run, model of the car, etc, the car is evaluated and the bank or finance company will lend you the necessary car loan and car loan interest rate appropriate to it. Mostly you will get around 70% as the loan amount. If you have a good relationship with the bank, you can even get up to 90% of the value of the car with a good interest rate. The car loan interest rate is normally calculated on the combination of the model of the car, age of the car and the profile of the customer. You can also calculate the interest rate by using the car loan EMI calculator.

Organized dealer versus unorganized dealer:

With more efficient and cheap new models of cars entering the market, more and more individuals are selling off their old cards to buy new ones. Therefore, there are a lot more fresh options for you to choose from. Most vehicle companies have their own organized dealers. This means you have many options available in the used car market these days. These dealers go through a stringent process of identifying and sourcing these cars, certifying their value and deciding the resale value, thus reducing the financers risk in the process. They even offer a minimum 6 month warranty for such cars.

So, you must take the car loan on used car with due research only as quite a few factors affect its value and principal amount. Do use car loan EMI calculator to ensure that you have suitable EMI.