Car loans – New vehicle advance, utilized vehicle endlessly advance against vehicle 2022 USA
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Vehicle loans provide a convenient solution for purchasing your dream car, whether it’s a necessity or for leisure purposes. Instead of paying a large sum of money upfront, which may take years of saving, vehicle loans allow you to acquire the car you desire and repay it through manageable installments. Let’s explore the different types of vehicle loans available:
New Car Loans
These loans are specifically designed for brand-new vehicles available directly from the manufacturer’s showroom floor. Opting for a new car offers the added reassurance of readily available services, spare parts, and manufacturer-backed warranties, providing owners with a greater sense of peace of mind.
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Utilized Car Loans
Utilized car loans are financial advances available for purchasing used vehicles, either from dealerships or individuals. Used or pre-loved cars typically come at a significantly lower cost compared to when they were brand new, often providing more value, features, and performance than new cars at a similar price.
Car Refinancing
Car refinancing, also known as credit against a car, allows you to lower your monthly payments by obtaining a new loan with a lower interest rate or extending your repayment period.
You can apply for both new car loans and used car loans on online platforms like Car Wale, which offer the added benefit of an Insta Pre-Qualified Loan, comprehensive credit analysis tools, and more, without the need to leave your home.
Eligibility Criteria for Loans
Banks and lenders consider various factors before offering a car loan, including:
Age, with a minimum and maximum limit
Monthly income with a history of stable employment or business
Your credit report. A car loan inquiry on Car Wale provides you with a free credit report courtesy of Experian, which should help you secure the best deals.
Your previous relationship with the specific bank or agent
Type of vehicle – used or new
Stability of residence, as more frequent moves could lead to higher interest rates or lower loan amounts
Online tools like those on Car Wale can help simplify the loan eligibility process. No need to run around with documents, visit multiple banks, or prove your eligibility each time – everything can be done with just a click.
New Car Loans vs Used Car Loans
Apart from the obvious difference in the type of vehicle you can purchase with these loans, there are several significant distinctions you should consider before deciding between the two.
Loan amount – Banks and lenders typically offer a higher loan amount for a new car compared to a used one. If all conditions are met, you can obtain a 100% loan for a new car, but only a maximum of 90% can be obtained for a used car.
Loan tenure – Car loans for new vehicles can be repaid over a longer period compared to used vehicles. While certain banks offer repayment periods of up to seven years for new car loans, most provide a maximum of five years for repaying a used car loan.
Interest rates – Banks and agents generally offer lower interest rates on new cars, considering they are covered by manufacturer warranties and are less likely to have issues. Interest rates on used cars are relatively higher due to the same rationale – they may not be covered by warranty and can be prone to additional issues and repairs.
You can use online tools like Car Wale to compare loan amounts, tenures, and interest rates for both new car loans and used car loans, making it easy to make an informed decision.
When Should You Consider a Loan Against Car/Refinancing?
Refinancing is an option to take out a new loan to repay an existing loan, with your car serving as collateral. The new loan will provide a lump sum to pay off the existing loan and offer a new interest rate and repayment period. Refinancing is beneficial if:
1) The interest rates decrease during the term of your initial loan repayment, as refinancing can lower your monthly EMIs and reduce the total amount you spend.
2) Your credit score has improved, qualifying you for better interest rates than initially offered.
3) You want to extend your repayment period to save more money for other purposes. This will increase your overall repayment amount.
You should avoid refinancing if:
1) You would incur prepayment penalties on your existing loan.
2) The processing fees and other charges are higher for the new loan.
3) Your budget cannot accommodate another loan repayment in your financial plan.
People Also Ask
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