It is not always possible to avail huge finances for purchasing a car and this is the reason why people opt for the used car finance. If you dream of a car that does not fit into your finances, then it is better to go for the used cars. These cars are available at a cheap rate for which you can even avail finances easily. People arrange for the used car finances from their relatives and friends, but nowadays there are finance companies that are providing used car finance. The used car loans are disbursed on the basis of the usage value of the cars and no the original price. This means that the finance companies can provide loans by calculating the percentage of the car usage rather the original price.
The used car finance is suitable for the people who are looking to buy cars by availing smaller loans or who are running a little low on the budget. One needs to pay a fixed amount as the down payment and this is generally the difference between the original cost of the car and the loan amount. This is generally a small amount in comparison to what one has to pay as down payment while getting new car finance. The used car finance is available for the cars that are below the 5 year usage mark. The loan repayment period can range anything between two to five years.
1. There are two types of used car financing available in the market: secured and unsecured. In case of the secured used car loans, you need to provide some collateral as security for the loan amount. The borrowers generally use their car as the security and probably this is the best security that one can provide, but one can also use real estate, jewelry etc. For availing the secured loans you do not even have to pay a high rate of interest and this is the reason why people prefer to avail these loans. Apart from the above details one must remember that the assets that one pledges can be confiscated by the finance companies if the loans are not repaid.
In case of the unsecured loans anyone can avail them and there is also no need for the collateral. The only thing to be considered is that the rate of interest for the unsecured loans is higher than the secured ones. So if you are prepared to pay a higher rate of interest and do not want to pledge your assets, then this is the loan for you. These loans are definitely expensive but you are free from the worries of having pledged your assets. The people who have a bad credit score would have to pay much higher than the ones who have a good credit score. Try to go for the lowest repayment time as this would bring down the interest significantly.
Some of the things that one needs to keep in mind while applying for the used car loan are the time periods for repayment, rate of interest, value of the car, etc. You can even opt for the one time repayment scheme to avail lower interest rates. If you are aware of your repaying capacity and successfully pay back the loan amount then the used car loan will prove to be a boon.