Money matters: Should you go for a used car loan?

When it comes to buying a used car, Firstpost has always been very pro. After all, car is a depreciating asset, and if you want to own your set of wheel and not spend a bomb on a new car, a used one is always a good option.

But, it also matters how you buy that pre-owned clunker. Ideally, it should be via savings, but there are many banks which are more than happy giving you a used car loan. And if you are tempted to take one, there are a few things you should keep in mind.

The rate of interest: Usually it is 5-7 percent higher than a loan taken for a new car.

The loan amount: As far as a used car loan goes, you will get a smaller amount as loan, usually 70-85 percent of the cost of the car. In other words, you will have to shell out a higher amount as down payment while taking a loan for a used car.

Duration of the loan: Lenders offer a loan tenor of five years for new cars; a few up to seven years. If you take a used car loan, few would offer a tenor of five years, most are for a tenor of three years.

Watch the above video to know more. And, do tell us more about your views on taking a used car loan in the comments section.