If you are planning to buy a pre-owned car on a loan, here are the latest interest rates offered by some of the top banks in the country.
The Covid-19 pandemic has left many people questioning the safety of public or shared transport. Many feel that using these means of transport indeed heightens the risk of getting infected by the deadly coronavirus. As a result, many who didn’t own a car before the pandemic are now planning to buy their first car.
However, this doesn’t change the fact that the ongoing crisis has landed a heavy blow to the global economy, resulting in widespread job losses, pay-cuts, and diminishing business incomes. In these uncertain times, most people are also trying to cut corners wherever possible to boost their cash reserves to be able to fulfil their critical financial commitments like rents, loan EMIs, groceries, etc.
Keeping in mind both these factors, many are, hence, exploring affordable car options so that their transportation requirements are met without burning a deep hole in their pockets. As far as affordable options are concerned, buying a pre-owned car instead of a brand new one could effectively tick both these boxes. And since they are cheaper than new cars, your loan EMIs are likely to go down even if the rate of interest is slightly higher than a new car loan, according to BankBazaar.
Now, most of the banks and lending institutions in the country offer loans on pre-owned cars with repayment tenures of up to seven years. However, do note some lenders offer such loans only on used cars that are less than three years old. Also, while some lenders could offer up to 100% financing of the pre-owned vehicle’s value, most are likely to ask for a down payment. Also, the cost of insurance is not included in the loan ambit, but it will still be relatively cheaper for a pre-owned car than a new car.
If you are planning to buy a pre-owned car on a loan, here are the latest interest rates offered by some of the top banks in the country, including the State Bank of India and HDFC Bank. But before you sign up, ensure you compare your options for the best repayment terms and also get complete clarity on document requirements and associated expenses like processing fees and pre-closure charges. Also, do note that some lenders will give you an interest rate concession if you’re already servicing a home loan with them, as per BankBazaar.
Most importantly, ensure all your EMIs put together are less than 40% of your monthly household income. Any lapses in repayment would not just adversely impact your credit score and attract penalties but you will be at risk of losing your loan collateral, which, in this case, is your car.
Disclaimer:Data as on the bank websites on July 2, 2020. Rates from leading banks advertising their rates. The list is not exhaustive. Some leading banks not advertising their rates have been excluded. Interest rates are subject to changes at the bank’s discretion. Compiled by BankBazaar.com.