Nowadays, it’s a well-known fact that buying a used car instead of a new car makes a lot more sense and it has become a common practice now amongst motorheads and there are good reasons behind it, let’s look at some of these reasons.
Benefits of buying a second-hand car:
- Organized sector and well-oiled corporates have entered the car dealership business and they ensure that second-hand cars are not damaged, well-maintained and even certify them.
- For a new driver who is still trying to get a hang of driving, it is a great option to go for a second-hand drive otherwise he/she will just be putting scratches on their new car.
- In the first 2 years in which the car comes out of a dealership, the depreciation is the highest but you don’t have to worry about that because you are driving a second-hand car.
- No need to pay sales tax on a used car
- No waiting period for a used car
- The amount of money you will spend on buying a mid-level brand new car, with a similar amount you can buy a high-end second-hand car.
- Smaller amount of down payment.
But before actually buying a second-hand car, you should do thorough research on things like, whether or not the car has an unpaid loan, if it is stolen and how is the condition.
In recent years the quality and durability of a newly manufactured car have gone up drastically and if you are driving a second-hand car which is in good condition, it can easily qualify as new.
Today it is possible to get a loan on a second-hand car because most car buyers nowadays like to finance their car instead of paying the whole sum in one go because it is easier and more convenient to pay in smaller instalments instead of a lump sum amount.
When you take an auto loan, the interest rate, APR, and term length are based on several factors such as loan amount, from where you borrow and your credit history.
Chances are that you may want to extend the period of the load to reduce the number of instalments further, but for how long?
So if you are wondering For how long can I finance a used car? You will get your answer in this article.
Understand an Auto-loan
It’s very important that you first understand how an auto loan works when it comes to financing your car. It’s not that you borrow an amount and then pay it back after a certain period of time but actually, there are several reasons that decide the loan elements such as the amount of down payment, term length, APR and interest rate.
The length of your loan ranges from 24-84 months, depending on the other factors involved in a loan. If the duration of the loan is more the the amount of installments will be less. Similarly, if the duration is less then the number of instalments will be more leaving you with a bigger dent in your bank account.
If you put a larger down payment then the loan amount will be less and vice versa.
The interest rate is the percentage charged on the principal amount that you will have to pay to the bank. Depending on your credit score your interest rate may vary, if the credit score is good then the interest rate will be less and vice versa.
The Annual Percentage Rate (APR) gives you a broader picture of your yearly cost throughout the lifespan of the loan as it takes into consideration the interest rate and other fees charged by the lender.
Driving a second-hand car has a lot of advantages, you get saved from so many extra expenses thus saving you a lot of money while driving almost a brand-new-looking vehicle.
How long can I finance a used car?
Usually, it is the lender who will set the time limit of the loan, but in general, the maximum time period for which you can finance a used car is 72 months.
However today as the demand for second-hand used cars is at an all-time high, the maximum time limit to finance a used car has gone up to 84 months.
It is important to note that it is very difficult to secure a loan for a car around 10 years old or more.
Benefits of a long-term loan
You must have noticed that if there are stairs, climbing any height becomes easy, that’s because you break one big task into a smaller number of tasks. Similarly, that’s how a long-term loan works.
Let’s say you like a particular model of a car, but currently, you don’t have the finances to pay for it, that’s where the long-term finance makes it easy for you. By breaking the total amount into smaller payments you make it easy for yourself to maintain a decent amount of bank balance while still enjoying your favourite ride.
Second-hand vehicles are a really good option if you an automobile enthusiast and your eyes are set on one particular car model but at the moment you don’t have the kind of money required so don’t worry there are a lot of finance companies present in the market who are willing to make your dream come true.
With easy financing options available, you can choose the exact car and model you would like to buy without having to put too much pressure on your bank account. Long-term financing options bring most of the cars within your budget’s reach unless you are planning to buy an F1 car which would cost a lot more.