If you are planning to buy a car on loan, chances are that you may be stuck between choosing a car loan for a new car or a used car loan. While a new car loan enables you to buy a brand-new vehicle, a used car or second-hand car loan provides financing to purchase a pre-owned car.
Today, many lenders in India offer car loans to purchase new cars as well as used cars. These are offered at attractive car loan interest rates that may vary from lender to lender. In this article, we will discuss the features and benefits of used car loans and new car loans to understand what’s the right choice for you.
New Car Loans
You can avail a new car loan if you wish to purchase a brand-new car. The car loan interest rates for new cars are slightly lower due to the reduced risk of breakdown. Moreover, the process to apply for and get a personal loan to purchase a new car is less troublesome but comes with a higher insurance premium. The tenure for such loans is usually between 5 to 7 years so you can manage your car loan EMIs comfortably.
Some of the features of new car loans are:
Some banks and NBFCs offer loans for new cars for up to 100% of the car’s on-road price, where you do not need to make any down payment using your savings.
The lenders may also offer car loans at a lower interest rate if you have a good credit score.
You do not need to provide any security or collateral to avail a car loan.
The application process to avail a new car loan is easy, hassle-free, and requires minimal paperwork. You can also get the loan approval quickly.
Used Car Loans
With the pre-owned car market evolving in India, purchasing a used car can be a great option if you find it difficult to afford a new car. These days, dealers take utmost care to ensure that the used car is in good condition so that you have no problems even after buying a pre-owned car. You can also avail car finance to purchase a used car so that you do not have to pay the entire amount upfront from your savings. Many banks and financial institutions now offer financing to purchase pre-owned cars at attractive used car loan interest rates and flexible loan terms. However, before availing a used car loan, you must ensure that the pre-owned vehicle is not more than 5 years old as most lenders do not offer car loans for used cars that are over 5 years old.
Let us look at some of the features of a used car loan:
You can avail a used car loan for up to 90% of the car’s value.
You will have to pay 10-20% of the car value as a down payment from your savings as the loan amount will not cover 100% of the car’s valuation.
The used car loan interest rate may be higher than a new car loan.
Bottomline
You must consider all your needs and preferences to decide whether you want to go for a new car or a pre-owned car. You must also take into account which option is more affordable for you.
You can apply for a car loan on CASHe and use the loan amount to purchase a new or used car. Take advantage of our quick and hassle-free car loan application process with instant loan disbursal, and buy the car of your dreams now!
