You've got your eyes on that sleek, shiny set of wheels sitting at the dealership, but your wallet's feeling a little light. That's where a car loan comes in handy!
Instead of waiting around for years to save up enough cash, you can hit the road in your new wheels right away. But like any adventure, there are twists and turns along the way. You've got to maintain your credit score, know your negotiating terms and then choose the most suitable loan option for you that will help you save as well.
Your credit score and net monthly income determine your eligibility for a car loan. Most lenders offer 75% to 100% of the vehicle's on-road pricing, depending on the model and price. You can also get a loan to purchase pre-owned car and other used vehicles.
New Car Loan
You can get a car loan to buy a new car. The lender will usually pay for most of the car's cost, about 90%. You just need to pay the rest, which is around 10%, as down payment. The total cost of the car includes its base price, registration fees, insurance, and taxes. You'll pay back the loan over seven years. You can choose to pay back the loan in small monthly payments called EMIs.
Pre-owned Car Loan
You can also get a pre-owned car loan. Buying a used car is a less expensive option than buying a new one. Lenders typically give up to 75-80% financing for pre-owned cars. The car is hypothecated with the lender until the repayment period finishes and you have paid off all EMIs. However, the car's age and the new payback duration should not be more than eight years.
New vs. Used Car Loans – Weigh Your Options
- Affordability and Maintenance
If you're watching those purse strings, going for a used car is a smart move. Just a heads-up; there might be some unexpected repair costs popping up. It's all part of the journey, right?
Sure, new cars might demand a bit more from your wallet upfront, but they tend to offer smoother rides with fewer surprise visits to the repair shop down the road.
- Repayment Period
Get ready to crunch some numbers! New car loans can stretch as far as 84 months, giving you ample time to budget and plan, while used car loans usually max out at 60 months, keeping things efficient and focused on the road ahead.
- Warranty
Unused cars as a rule come with a manufacturer’s warranty, meaning repairs are secured without plunging into your stash. In any case, with pre-used cars, warranty may be offered by the car dealer, but it might come at an additional cost.
- Insurance
As per Indian Motor Vehicle Act, both new and used cars require an insurance cover. However, new cars will incur a higher insurance premium due to their greater value, while used cars enjoy lower insurance costs.
5. Car Finance
New cars usually get up to 90% ex-showroom price financing, whereas used cars may only get financed up to 75% of their current market value.
- Car Age
Regarding car age, used cars must be under 96 months old, while new cars are not subject to this restriction.
Streamlining Your Car Loan Application - How-to-Guide
- Check your credit score: Your credit score is an important component of the vehicle loan. As an inexperienced borrower, you should first examine your credit score, as banks prefer lending to those who have a solid credit history.
- Fill up the application form: To apply for a loan, you will be required to submit your loan application to your preferred bank. Make sure the form is completely filled out accompanied with all valid documents.
- Application Verification: To determine your eligibility, banks will verify your documents, review your profile, and check your credit score. If you meet the criteria to be qualified, they will process your loan application.
- Loan Approval: Banks often approve vehicle loans between 1 to 5 days. However, this duration varies from bank to bank.
Conclusion
At Car Par Loan, we believe in helping you make informed decisions that suit your financial journey. New and pre-owned car loans each have their own merits, and the choice ultimately depends on your preferences and needs.
Whether you prefer the flexibility of new car loans or the cost-effectiveness of pre-owned car loans, our team is here to guide you through the financing process and ensure you have a smooth ride ahead. So, don't hesitate to reach out to Car Par Loan when you're ready to hit the road toward your dream car with the perfect financing plan to match. Happy driving!
