Owning a car has become quite commonplace. For some, it has become a necessity and a symbol of status, especially in big cities. People often choose to buy a new car, as they have to take out a car loan. However, the need can be met even with a used car that is available at a much lower cost than newer ones.
New car loans vs Old car loans:
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Hectic process and premium insurance
In the case of a new car loan, there is always a warranty from the manufacturer, which reduces the workload for the lenders. The whole loan process is smooth and compact, while the car has a high insurance rate.
Older cars do not attract banks to give you easy loans. The value of the loan will not be more than 80 percent of the value of the vehicle, while insurance premiums will remain low in the event of a second-hand car.
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Banks prefer to lend for new cars more than on used cars
Banks prefer to provide new car loans provided you have the Car Loan Eligibility due to lower risk for new cars and offer easier loans to borrow more. And in the case of a new car loan, one can get a loan for about 90% of the car's cost and the same interest rate will be lower. The interest rate is between 9% or more.
In the case of second-hand cars, banks will be less likely to show interest, and interest rates will be higher than 13 percent.
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What are your options?
The new cars come with the latest technology, better mileage, and lower emissions. The new cars today offer a variety of new features too, to enhance your driving experience.
If you have a used car, it is always advisable to have it tested by a mechanic or a car mechanic before buying it. Second-hand cars are always a good option as it saves money, depreciation, premium costs, etc. However, if you want to buy a car on credit, it may be best to buy a new one, if it is less expensive.
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Amount of your loan
In the case of a new car, you do not have to deal with an unknown car history. The new car comes with a manufacturer's guarantee of a certain number of years or the number of miles traveled by car. This is taken into account when granting a Fullerton India Car Loan. In the case of a new car, the amount of the loan disbursed is usually higher than the amount of the loan disbursed in the event of an old car loan. The Lower-to-value ratio (LTV) is lower in the case of a used car while you get a higher loan-to-value ratio in the event of a new car loan.
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Term of the loan
You will receive a long-term loan in the form of a new car loan. Fullerton India Bank offers loans for used cars for a period of 5 years while it is a new car, the loan can be increased to 7 years.
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Interest rates
In the case of used vehicles, the risk involved in the bank is high; therefore they tend to charge higher interest rates. Fullerton India Bank offers used car loans at an interest rate of 15% and in the event of a new car, the loan is available at an interest rate ranging from 11.50% to 12.50%.
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EMI
As interest rates and downtime will be lower for new car loans, the average monthly installments (EMIs) will also be lower. Therefore, it will be easier for you to repay the car loan without the burden.
So think about these things before buying a new or an old car. It is also important to decide if you want to get a new or second-hand car. Loans are available for both new and second-hand cars. Almost all banks offer car loans for both new and second-hand cars. However, interest rates, legal, low payment rates on vehicles can vary from bank to bank.
