Debt-to-income ratio
Your debt-to-income ratio reflects the amount of money left over after paying off your existing loan EMIs. You may be unable to obtain an affordable second-hand car loan interest rate if this ratio exceeds 50%.
Used Car Loan Interest Rates & Fees
Why postpone your decision to buy a set of wheels when Hero FinCorp offers the best used car loan interest rate on the market?
Used Car Loan EMI Calculator
What is the Used Car Loan Interest Rate?
The used car loan is the best way to get out of financial constraints and drive your dream four-wheeler home. The funding amount offered under this financing option ensures you can get the car with the most high-end features without worrying about its cost. The vehicle you purchase with a used car loan is hypothecated with the lender until you repay the entire outstanding dues with interest. The secured nature of this loan allows you to get a lower pre-owned car loan interest rate, provided you have a good credit profile.
Hero FinCorp Used Car Loan Interest Rate
The used car market is flooded with vehicles from almost every segment. You can select from a low-cost hatchback to a luxurious sedan. At Hero FinCorp, we make sure that you do not have to forego your dream car due to funding issues or high interest rates. We provide an affordable used car loan interest rate based on your credit history, income, and the vehicle you wish to purchase. So, what's stopping you from getting your hands on the steering wheel of your dream car?
How to calculate the Pre-owned Car Loan Interest Rate?
We calculate the used car loan interest rate using the reducing balance method. This means that you must pay the interest rate on the outstanding loan balance each month rather than the principal loan amount. When you pay off your monthly obligation, your interest is recalculated to be less than the previous month's interest amount.
- The mathematical formula you can use to calculate your EMI is detailed below
EMI = [P x R x (1+R)^N] / [((1+R)^N)-1)]
Here,
EMI is the payable equated monthly instalment,
P denotes the principal loan amount,
R stands for applicable interest rate, and
N stands for the repayment tenure in months.
Factors that Influence Used Car Loan Interest Rates in India
Many factors affect your pre-owned car loan interest rates, but the most important ones are listed here.
How to get the best Used Car Loan Rate of Interest?
You can obtain a lower used car loan interest rate by following the tips recommended below.
Vehicle model and age
Look for a vehicle with a higher resale value rather than one whose production was halted years ago by the manufacturer. Also, avoid purchasing a car that is nearing the end of its life cycle. If you follow this advice, you may be able to easily secure a lower used car loan interest rate. This is because in the event of a default, the lender will be able to recover any outstanding amount easily by selling your car.
Maintain a healthy credit score
A credit score defines your credibility and ability to manage debts. If you are maintaining a healthy credit score by paying your EMIs on time and checking for any discrepancies in your credit report, you can secure a used car loan at a lower interest rate.
Compare lenders
The eligibility requirements for a used car loan vary depending on the lender. You can easily obtain a lower interest rate on a used car loan if you apply for a loan where your profile perfectly conforms to the qualification criteria. Thus, it is necessary to compare offers from different lenders before
applying for the loan.
Increase down-payment
Increasing the down payment makes you more vested in the loan while lowering the principal amount and EMI. It further reduces the lender's risk of lending to your profile. This will give your lender the impression that you are financially stable, and they will not hesitate to lend funds to you at a lower Pre-owned Car Loan Interest Rates.
Points to Consider while Availing a Used Car Loan
Eligibility requirements
Carefully go through your lender's used car loan eligibility quirements. Check if the various criteria like minimum income requirements, work experience, and the applicant’s age match your profile.
Loan amount
Confirm whether the amount offered by your lender meets your funding needs. If your lender offers a lower loan to value (LTV), you will need to arrange for a larger down payment or buy a lower-priced car model having fewer features.
Fees and charges
Keep an eye out for any hidden fees associated with the used car loan. Some of these fees, such as the processing fee, are required, while others, such as foreclosure fees, are situational.
Car-related documents
Review all used car paperwork, including the registration certificate, road tax receipt, service record book, and insurance papers. They have a significant impact on whether your used car loan gets approved.
Frequently Asked Questions (FAQs)
Your income informs a lender of your repayment potential. If your current income does not comfortably cover your existing debt obligations, the lender will consider you a risky borrower. This may lead to the rejection of your loan application, or the loan being offered at a high-interest rate to mitigate the potential risk.
Insurance provides a comprehensive overview of a vehicle's condition. It assists your lender in determining whether the vehicle has been involved in a major accident in the past or why its previous owner filed a claim. If the cause is significant, you will be charged a hefty interest rate for financing the used car.
Yes, the lender imposes a foreclosure penalty if you pay off your used car loan early. They do this to offset the loss of future interest income.
You can get a low interest used car loan if you introduce a co-applicant with a good credit history and consistent income on your loan application.
No, there is no tax benefit if you use the car for personal use. However, if the vehicle in question is used for commercial purposes, the interest paid on it is treated as a business expense and can help you reduce your taxable income.
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