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Comparing Second Hand Car Loan Interest Rate

Posted by herofincorp in Finance on November 29th, 2018

Whenever the word borrowing comes to mind, the first thing you think of is the interest rate. The interest rate on a loan will have a huge impact on the amount of your monthly outflows. Consumers have a pattern of borrowing when the interest rates are low and of delaying their purchases when the interests rates rise.

If you are keen on buying a second hand car, you need to understand the interest rates in the market. After deciding on the car you want to bring home, you will have to approach lenders for a loan on the same. A second hand car loan is available for every model and brand of the car available in the market. The only criteria is that the car should not be more than eight years in age. Test drive the car before you make the buying decision. Keep in mind that you are buying a second hand car loan and there will be maintenance costs associated with the same. However, choose a car that has low or minimal maintenance costs.

When you scout the market for lenders, you need to compare the second hand car loan interest rate. Do not apply for a loan with the first lender you come across. You need to research the market and choose the one that offers consumer friendly terms and conditions. You will have to repay the loan amount in equal monthly installments over the tenure of the loan. A low interest rate means your EMI will be lower and a high interest rate means you will end up paying a huge amount in the form of interest in addition to the principal amount borrowed.

The second hand car loan interest rate will vary from one lender to another and also varies from time to time. Consider your current financial health and determine your ability to pay the installment on time. The EMI will be your regular cash outflow and you should not default on the same. If you think that the EMI amount is very high, you can ask for a longer tenure so as to reduce the amount. You will also be required to make a down payment for the purchase and the balance will be converted into a loan. You will have to make a substantial amount of down payment so that the loan amount can be repaid by you over the estimated period of time.

Buying a car is a huge decision and you should not rush it. Keep your purpose of purchase in mind and ensure that you are choosing the right car that fits your budget and your usage. You can make use of an EMI calculator in order to estimate the amount of EMI you will be required to pay each month. The calculator is available online and can be used by providing the loan amount and the tenure. The prevailing interest rates will be used to determine the EMI amount for you.

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