Finance is one of the most important aspects of our lives, isn’t it? Whether we buy a house or a car, we need financing. But not always people buy a new car and get the chance to decide on a completely new loan. So many of them tend to opt for the already used loan for the car.
Are you planning to buy a used car? Then you will need to know certain things which will help you to understand whether you need a new car loan or the already existing plan will do.
Used Car Loan Vs New Car Loan
When a person buys a used car, they are left with two options for financing their vehicle – use the already existing car loan or opt for an absolutely new loan. So before you decide any of these options and want to ensure a hassle free riding experience, you will need to know a few things.
Must Read: Are Used Car Loans Cumbersome?
The very first factor which you will need to take into consideration is the interest rate. The lesser the interest rate has been provided, you will need to payout a lesser amount from your side. The interest rate of used car loans can range anywhere between 13%-20% annually whereas the interest rate of personal loam can be anywhere between 14%-25%.
However, the rates may vary depending on the lender you are choosing the loan from and therefore you will need to choose the one which has a low-interest rate.
Quantum of Finance
Usually, people get up to 65%-80% of the valuation amount of the used car. Depending on the valuation the lender had made previously for the used car, you will need to pay the rest of the amount from your pockets. But that is not the case in a personal loan.
When you choose a personal loan over an used car loan, you will be able to pay of different fees and bills if you face any issues with it without spending from your side. However, there are different terms and conditions which you will need to fulfil before getting such benefits from the lender.
Getting yourself a loan depends on a lot of things and your credit score is one of them. When it comes to purchasing a personal loan you will be immediately denied of you have a poor credit score. You will only be eligible for an unsecured loan in that case.
However, even if you get the personal loan, the lender will charge a much higher rate of interest if you have a poor credit score. So it can be really difficult.
But that is not the case with used car loans, because the loan is already functioning and you will receive it based on the details of the former owner. In many cases, thus the interest rate is on the lower side.
Final Verdict – preferably for most of the people and a used car loan is more economical than a new personal loan. The rate of interests are lower and there aren’t many hassles to face. However, depending on your preferences you will need to choose your loan.
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