Purchasing a car is a significant investment. It requires sound financial planning and adequate savings. However, your savings might still fall short, or you may not want to exhaust it completely. In such cases, the best idea is to buy a preowned car with the help of a loan for used cars. Alongside the financial cushion, it has several other benefits. Here are five reasons why using a used car loan has become increasingly popular.
Lower Loan Amount
One of the most compelling reasons people opt for a loan for a used car is the lower loan amount compared to financing a new vehicle. Since used cars have depreciated, the cost is significantly lower, resulting in a smaller loan. This can make the monthly instalments much more manageable.
- Affordable repayments: The monthly repayments are also lower with a lower loan amount.
- Easier to qualify: Lenders are more willing to approve loans with smaller amounts, making it easier for borrowers to get the financing they need.
Must Read: Ladies Bike Price
Lower Depreciation Rate
Another reason people prefer taking a loan for a used car is the lower depreciation rate. New cars lose value rapidly when they leave the dealership, but used cars have already undergone the most significant depreciation.
- Retained value: Since the depreciation rate is slower, the car maintains its value longer, which is beneficial if you decide to sell it in the future.
- Better loan-to-value ratio: A lower depreciation rate can result in a better loan-to-value ratio, making it easier to pay off the loan faster.
Access to a Wider Range of Cars
When you opt for a loan to buy a used car, you have access to a broader range of vehicles within your budget. Since used cars are more affordable, you can explore higher-end models or brands that need to be in reach if you buy new ones.
- More options: The used car market offers a variety of models, including those with advanced features that may not be affordable in a new car.
- Luxury within reach: For those who dream of owning a luxury car, a used car loan can make that dream more achievable.
Must Read: 100 km Mileage Scooter
Lower Insurance Costs
Insurance is a mandatory expense for car owners, and its cost can vary significantly depending on the vehicle’s value. Used cars generally have lower insurance premiums, making them more economical in the long run.
- Reduced premiums: Insuring a used car is typically cheaper than a new one, further lowering the overall cost of ownership.
- Customisable coverage: Since the car’s value is lower, owners can choose insurance plans that offer just the right amount of coverage without overspending.
Flexible Repayment Options
Another significant advantage of a used car loan is the flexibility in repayment options. Lenders often provide a range of repayment plans, allowing borrowers to choose the one that best suits their financial situation.
- Customisable EMIs: A used car loan EMI calculator helps borrowers easily adjust the EMI amount based on their repayment capacity.
- Shorter loan tenure: Since the loan amount is lower, borrowers can opt for a shorter tenure, allowing them to pay off the loan quicker and save on interest.
Conclusion
Taking a loan for a used car offers several advantages, from lower loan amounts and insurance costs to access to a broader range of vehicles. The flexibility in repayment options further enhances the benefits, making it an attractive choice for many car buyers. Whether you’re looking for affordability or variety, a used car loan can provide a practical solution for your transportation needs.
Must Read: How to Calculate Two-Wheeler Loan EMI?
