Used car loans are becoming a popular financial solution that helps you to purchase a second-hand car. It provides you with the flexibility to purchase your dream car by spreading its cost over a predefined tenure. Bajaj Finance offers used car loans of up to Rs. 77 lakh, making it easier for you to fulfil your dream of owning your desired vehicle.
When it comes to used car loans, choosing the right tenure is one of the critical decisions you will make. The loan tenure has a substantial impact on your EMIs and the entire cost of financing your car. Therefore, choosing a suitable tenure for your used car loan is essential to ensure that it corresponds with your financial goals.
Here are four factors to consider while choosing the right tenure for your used car loan
- Loan amount
The amount that you need to purchase a used car has a considerable impact on the loan tenure. You do not need to spread out your loan tenure for a longer duration for smaller loan amounts. Similarly, if you intend to borrow a significant sum of money, it is preferable to extend the loan tenure to reduce financial strain.
- Interest rates
The lender's interest rate has a considerable impact on the cost of your used car loan. Shorter tenures are typically associated with lower interest rates, making them more cost-effective in the long run. Longer tenures may have higher interest rates, resulting in a greater total interest paid despite lower EMIs.
Before deciding the tenure, compare the used car loan interest rates offered by various lenders and select the one that offers a competitive rate.
Additional Read: How to get the lowest used car loan rates
- Monthly budget
The loan tenure should be determined by your monthly budget and the amount that you can comfortably spend on loan payments. If you are financially secure, you can opt for a shorter tenure with higher EMIs. However, you also have the option of opting for a longer tenure, which results in more affordable EMIs.
Start by evaluating your monthly income and spending to choose the right tenure. Ensure that the EMI you select aligns with your budget without putting pressure on your finances.
- Future financial outlook
It is important to assess your future financial outlook when selecting the loan tenure. Factors such as expected salary increments, potential windfalls, and other financial changes can impact your ability to repay the loan. If you anticipate a significant increase in income in the near future, you may consider a shorter tenure. This will help you in reducing the overall cost of the loan and you will become debt-free faster.
Bajaj Finserv Used Car Loan offers convenient repayment tenures ranging from 12 months to 72 months, helping you repay your loan with ease.
You can also make use of the Flexi facility for increased financial flexibility. The Flexi Hybrid Loan allows you to pay interest-only EMIs for the initial part of the tenure.
You can learn more about used car loans by visiting our used car loan page.