A used car loan is a practical way to fund the purchase of your dream vehicle. However, acquiring a loan with the most affordable possible interest rate may have a crucial impact on your buying decision.
It is important to ensure that your monthly payments are manageable and that they align with your budget. Therefore, it is essential to get the most favourable used car loan interest rate that allows a simple repayment process for your used car loan.
Here are a few tips on how to get low interest rate for a used car loan
- Maintain a high credit score
Your credit score plays a crucial role in determining your used car loan interest rate. Lenders use your credit score to assess your creditworthiness, and a higher credit score often translates to a lower interest rate. Start improving your credit score by paying off existing debts, making payments on time, and correcting any errors on your credit report before applying. A credit score of 700 or higher can help you get a Bajaj Finserv Used Car Loan at a competitive interest rate.
Make a significant down payment
When you make a larger down payment on a used car, you are reducing the principal amount of the loan. A lower loan amount can result in a lower used car loan interest rate, as it poses less risk to the lender. While the precise figure may vary depending on the lender and the car's price, it is advisable to aim for a down payment of at least 20%.
Shop around and compare offers
Different lenders have varying interest rates and terms, so it is essential to shop around and compare offers from multiple financial institutions. Make sure to look at the interest rate, repayment term, and any other fees or charges associated with the loan.
You can use the Bajaj Finserv Used Car Loan EMI calculator to simplify the process of reviewing multiple offers. This calculator can help you check EMIs by entering the used car loan interest rate, loan amount, and loan tenure in the relevant fields. Borrowers can use this tool as many times as they need to discover a loan that fits their repayment capabilities.
Opt for a shorter repayment tenure
Although a longer loan tenure might seem appealing due to the lower monthly payments, it often comes with a higher interest rate as the total interest payable increases with time. A longer loan tenure might provide temporary relief to your monthly budget, but it ultimately results in higher interest payments throughout the loan's duration. Choosing a shorter repayment tenure not only reduces the used car loan interest rate but also speeds up the loan payoff process.
Additional read: All you need to know about used car loan
Avail of pre-approved offers
Getting pre-approved for a used car loan can give you an advantage when negotiating the interest rate with dealerships. Pre-approval involves applying for a loan from a lender you already have an existing relationship with existing customers of Bajaj Finance can check if they have a pre-approved offer by simply entering their mobile number and OTP.
Planning and carefully evaluating all these factors can help you to secure the best used car loan interest rate possible. Bajaj Finance Limited provides used car finance with competitive interest rates starting at 10% p.a. Head over to the used car finance page to get funds in a hassle-free manner.
