Are you thinking of purchasing a car? Choosing between a used Car vs a New Car Loan isn't just about the car; it could shape or disturb your economic journey. At Car Pe Cash, we offer the lowest interest rates on car loans in Ahmedabad.
Choosing a premium used car at an affordable price will offer several advantages. It provides ownership of a grand model at almost half the cost; however, purchasing a used car also offers advantages such as a reduced rate of depreciation, a lower insurance premium and considerably lower registration fees.
Our professionals and dedicated executives at Car Pe Cash assist you throughout the process and journey, from choosing the right dealer to ensuring a seamless and satisfying car purchase experience. Acquiring a used car will enable you to save money at the start but also assist you to be financially secure and relaxed in the long term.
What is a used car loan?
A used car loan lets you buy a pre-owned car without exhausting your savings. Usually, it covers the cost of the vehicle along with the monthly instalments, which are decided based on your economic situation.
When considering funding for a used car purchase, it's necessary to understand the key features of a used car loan. These funding options offer a wide range of advantages, intending to simplify and make the car purchase more affordable. The primary aim of the used car loan is adaptability, affordability, and peace of mind throughout the loan process, as the used car loan mainly focuses on making it easier to purchase the desired vehicle.
Let's explore and understand the essential aspects of a used car loan, which make it a more attractive option for budget-conscious buyers.
Buyer will avail a used car loan up to 90% of the car's value.
The down payment will be around 10 to 20% of the car's value, as the loan amount will not cover 100% of the car's value.
The interest rate on a used car will be higher than on a new car loan.
Benefits of Acquiring a Used Car Loan
Choosing a used car loan option will give you a reliable vehicle while providing economic benefits. Car loan for used cars offer lower initial costs, lessen insurance premiums, and avoid the worst depreciation. It's wise to balance a quality budget with hands-on ownership.
Used cars follow friendlier pricing, making the car and the loan more affordable. These cars have already passed through the most expensive phase of loss of value, allowing you to avoid the quick depreciation experienced by new cars.
Securing a used car is better for the wallet, as the insurance premiums are usually lower than for new cars. There is no waiting period for used cars, as they are already available. You can take the car for a drive as soon as you get the loan approval.
What are New Car Loans?
Purchasing a new car always excites you, and a new car loan is the perfect option. The interest rate for a new car ranges from 9% p.a. Purchasers can select from fixed and adaptable interest rates. The fixed rate of interest offers the same monthly payments. However, with floating interest rates, the monthly payments may vary depending on market trends. The terms and tenures for such loans are usually between 5 and 7 years, which can be comfortable to manage the car loan EMIs.
Here are some of the features of the new car loans,
- Selected banks and financial institutions offer loans up to 100% of the car's on-road price for new cars. Also, you do not need to pay any down payment by investing your savings.
- Financial institutions can also provide car loans at lower interest rates if the buyer's credit score is good.
- The buyer does not need to provide any security or collateral to get the car loan.
- The loan application process is easy, stress-free, and requires minimal paperwork. It is also relatively quick, so the loan amount is disbursed quickly.
Benefits of Acquiring New Car Loan
Acquiring a new car loan offers apparent benefits. New cars exhibit some of the most popular modern technologies, integrating advanced features and safety options.
Less unplanned maintenance requirements and the happiness of experiencing the car's longevity from its purchase are also significant, influencing affordable interest rates.
As the first owner of a new car, you can enjoy an extended warranty from the manufacturer. Further, banks or financial institutions also offer beneficial financing terms with the possibility of lower interest rates. These substantial benefits make monthly instalments more manageable and enhance the affordability of owning a brand-new car.
The key difference between a new Car Loan and a used Car Loan
The Car's Condition
Unlike a used car, a new car is recently manufactured out of the workshop, and as it is recently manufactured, there is no reason for depreciation. Used cars usually deteriorate slightly more and direct a lower loan amount.
Interest Rate
Used cars and new cars have different interest rates. The interest rate for a used car loan is higher than for a new car loan. Older vehicles are always risk-taking, forcing financiers to charge high interest rates.
Loan tenure
The loan tenure of used cars is shorter than that of new cars; however, many financiers allow around five years to repay new cars, whereas new cars permit around seven years to repay the loaned amount.
Process of loan approval
The loan approval process for a used car is longer than for a new car, as the moneylender has to conduct a comprehensive inspection of the car. Purchasing a used car from an unorganised seller also delays the disbursal process.
loan-to-value ratio
The LTV loan-to-value ratio for a used car loan is lower than that of a new car loan due to the depreciation value of used cars.
Economic resale value and depreciation rates
The resale value of a new car is always high because it is unused. Simultaneously, the resale value of used cars is lower because of the higher depreciation rate.
Conclusion
Selection between a new and old car includes various factors, including the loan and interest rates on used cars compared to new cars. New car loans are more straightforward and have better terms than used ones. Simultaneously, choosing the right banker is also necessary for getting loans at the best terms.
FAQs
1. How much down payment is needed on a car loan?
Around 20% of a down payment is suggested to reduce the loan amount and monthly instalments.
2. Why is the interest rate high on a used car loan?
The interest rate for a used car loan is usually higher, as the associated risk with used cars leads financiers to impose slightly higher rates of interest.
3. What is a used car loan?
The moneylenders offer this loan depending on your creditworthiness and your selection of a specific car.
4. How do you get a low-interest-rate loan for a used car?
To acquire a low-interest loan for a used car, maintain a healthy credit score, make a significant down payment, choose a shorter loan term, and check the best available offers. For guidance, visit our website or contact experts for a financial consultation.