What is a used car loan?
A used car loan is a type of loan that assist you to finance a second hand car that is over a specific age. When you get a used car loan the lender will provide you the money to cover the buying price.
You will repay the loan amount, add interest in installments over a period of time regularly. These loans permit borrowers to spread out the cost of the over a defined period making it easy to manage the budget.
Used car loan can be a convenient method for Australians to finance their cash purchase.
Is it good to buy a used car or a new car?
Advantage and Disadvantage of used vehicles
Pros & Cons
- The depreciation rate is lower than that of a new vehicle
- More affordable
- Gives the chance to secure the make and model you desire with a constraint budget
- Older vehicles have limited options available for loans
- Difficult to approved for finance
- Likely to pay higher interest rates on a used car loan
What can you use a used car loan for?
A used car loan is available for purchases of new models.A used car designed to be used for purpose of purchasing a used vehicle. Used car loans available with restriction on the maximum age of the vehicle being purchased typically from 10 to 15 years. These restriction imposed by car lender to remain functional through out the loan.
New Car loans are available for purchase of vehicles between 3 to 5 years old.
How do you compare used car loans?
There are various factors for a used car loans.Some of which suit one borrower and some to others. Here i penned most important factors
The type of fees you may be charged vary from one lender to the other but may include following;
- Redraw fees
- Annual fees
- Early repayment fees
- Application fees
- Establishment fees
- Late repayment fees
- Early exit fees
The loan term is the duration you have to payoff the amount plus interest fees. Car loan terms generally 1-5 years. For used care age of car decide loan term. Generally the longer the loan term the easy the repayments but higher you will pay in interests.Shorter loan payment you pay less interest but costly repayments.
Interest rates decide how much you pay in terms of interest charges over the life of the loan.If you opt for variable rate its vary with market situation. Variable rate loans offer more flexibility. Fixed interest rate your payment will remain the same throughout your loan.
New car loans interest rate is far lower than used car loans due to risk involve in used car loans.Unsecured loans will have higher interest rates than secured loans.
What factor should you consider when buying a used car?
Buying a used car come with following reasons;
- Maintenance and Services
What is depreciation?
Depreciation is the reduction in the value of your car. Every vehicle loses value each year at different rates.
What is resale value?
The resale value is the price you charges if you were to sell your car. Every vehicle loses its value each year.
What is trade in value?
It is the price you charge if you were sell your car to dealer while buying a replacement car.