Benefits of Used Car Loan

Buying a car is a life milestone for everyone who could shell out those huge amounts of money all at once to buy their dream car. With growing times, changing demographics and emerging car loan lenders, for a majority of the people all around the world, owning a car today is no longer a luxury, but in fact a necessity made possible by taking a car loan. Car loans in India are often easier to avail when compared to any other loans and involves easy documentation with clear instructions and guidance throughout the full car loan approval and sanction process. Car loan borrowers can avail loans up to Rs. 1.5 cores which on most occasions covers the entire cost of the car.

One can opt for new or used car loan depending upon the need and the kind of car requirement. Although, most people prefer a car loan over new cars the second hand car price for loans is lesser. Most banks have reasonable EMIs within flexible tenure options to offer on Car loans. Most of the time lenders will be very quick to offer a secured loan even with bad credit, because of the fact that the vehicle is used as collateral if the borrower fails to pay. People with a very low credit rating may be able to take advantage of this loan by paying all the monthly payments on time. By doing this they will be able to begin restoring their credit score.

Nowadays people cannot imagine living without a car because that would impose a restriction for them from going places for work, duties or leisure, hindering a good social and professional life. Not only that, it has become a status symbol for most people to buy cars with the newest gizmos. But with newer technologies and lesser resources, the cost of cars are on a rise, often making it extremely difficult for the average individual to purchase their vehicle outright only using ones savings.

In today’s world you can buy used car without being looked down upon. Although it is still considered to be a status symbol but people have come a long way into considering it an object of need. You can put up your used car for sale to car dealers or even opt for the online mode for a more direct approach. Used car sales have become so prevalent all over the world that the market price for used cars has reached the lowest anyone has ever seen.

Although the interest rate for used car loan will be higher than the interest rate on new car loan the loan-to-value (LTV) ratio will be lower than the new car loan. Also used cars are associated with shorter loan periods, which means debt is paid back quicker.As a result sometimes banks pull back on the car loans. When lenders/ bank repossess cars, they resell the vehicles and use the proceeds from the sale to recover as much of the unpaid balance as possible. However with the decline in the value of used car the lenders are recouping only a smaller share of that balance. As a result the banks have to face an overall loss over the car loans in case the borrower is unable to make his/ her payments. This may seem like a beneficial option for the borrower but not so much for the lender.

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