What Are the Charges Involved While Applying for a Used Car Loan?
Buying a used car is an affordable option, which is further simplified with a second-hand vehicle loan. Financial institutions offer loans for all kinds of cars at competitive interest rates and flexible repayment options.
You need minimal documents to apply for these loans, making the entire procedure quick and hassle-free. However, before you avail of this loan, learn about the applicable charges. These include:
The used car loan interest rate is the biggest expense. Lenders offer the loan at a pre-determined rate of interest, which gets added to the borrowed amount. Based on the repayment tenure chosen between one yearto five years, you can repay the amount in Equated Monthly Installments (EMIs). Use an online EMI calculator to determine the approximate amount that you will have to pay on the used car loan.
- Processing fee
Almost every lender, be it a bank or a non-banking financial company (NBFC), levies a processing fee when you apply for the loan. This fee may vary among lenders;it is a certain percent of the borrowed amount. Before applying, check this used car loan rate, as it will affect the costof borrowing.
- Foreclosure charges/prepayment penalty
You need to repay the borrowed amount during the loan’s tenure. However, if you foreclose the loan, the lendermay levy foreclosure charges or a prepayment penalty. It is important to inquire about this amount with the lender before taking a pre-owned car loan.
- Stamp duty
When you avail of a second-hand car loan, you will have to sign a loan agreement with the lender. This agreement must be registered, and you need to pay the applicable stamp duty to create the charge on the vehicle. It is advisable to find out about these charges to get a clear idea about your actual cost of borrowing.
- Other charges
Lenders may levy additional charges, such as penal interest for delayed EMI, bounce charges, valuation charges, and instrument swap charges. All these used car loan fees impact the total cost of borrowing, and you must review these before applying for the loan.
Mahindra Finance offers maximumusedcar loan amount at economical interest rates for vehicles that are up to ten years old. It provides a repayment duration of up to five years. You can visit the company’s websiteto know more about this facility.