How Does Financing a Used Car Work?

How Do Car Loans Work? What You Need To Know | Credit Karma

If you thought only first-hand vehicles came with perks like easy financing, think again! 

Many financial institutions extend the same financing benefits to prospective used car owners as well. So, if you want to purchase a pre-owned vehicle, you can avail of a loan called a used car loan. 

Why choose a used vehicle loan?

Opting for a pre-owned car loan instead of denting your hard-earned savings comes with a host of advantages. Here are the top 5 benefits of opting for used car finance.

  1. Substantial loan amounts

The pre-owned vehicle market is diverse, with cars available in all shapes and sizes. Naturally, your funding needs will depend directly on the car model you wish to buy. For example, where SUVs are generally expensive, compact hatchbacks are relatively budget-friendly. 

Either way, many financial institutions offer used-vehicle loans that have a high ceiling. So, you can apply for a higher amount of money to purchase your desired model. 

With increased buying capacity, you won’t have to compromise on the budget or your preferred vehicle. 

  1. Attractive used-car loan interest rates

You’ll be happy to know that used-vehicle interest rates are at a record low these days. So, you can enjoy smaller monthly instalments, which means the loan won’t feel like a burden.

So, all you need to do is save enough money for a small down payment and research for a budget-friendly loan offer. 

  1. Simple application process

You can apply for a used car loan online, even submit document softcopies for verification. The entire process usually takes 6-7 working days or less. If you apply through a dealer, the process is even quicker. 

Just make sure to check your chosen lender’s used-car loan eligibility criteria before applying. 

  1. Flexible repayment tenures

Choose a lender that extends flexible repayment methods. This way, you can select a long or short tenure depending on your repayment capacity and pay back the loan comfortably. 

A used-car loan EMI calculator can help you determine the suitable tenure and plan finances better if you’re unsure.

  1. Quick disbursal 

Once the lender approves your loan application, the loan disbursal is generally very quick. In some cases, lenders approve the loan within a day or two and disburse it directly into your bank account. 

And, guess what? With quick disbursal, you can bring your pre-owned vehicle home in a couple of days only!  

Over to you

Financing a used car is no tough task as long as you have a credible lending institution backing you. So, find one that extends all the features and benefits listed above. Once that’s done, make sure to understand your overall loan cost before diving in. 

You can use a used-car loan EMI calculator online to do so. It can help you evaluate your monthly instalments at different tenures and amounts for effective budget planning. So, why wait? Go find your desired pre-owned car right away!