Today, the market of second-hand vehicles has expanded manifolds for people with limited funds. There were times when you could get a loan just for brand new cars. Banks and other financial institutions were little reluctant for granting a loan for second-hand vehicles.
Now the situation has changed, if you have your driving license ready to try on the roads, you can quickly grab a second-hand car to hone your driving skills.
Even if you are facing a funds crunch, here are some low-interest rate loan plans, offered by specific financial institutions for the financially incompetent drivers :
Zero Interest Schemes
By opting for zero interest scheme or no EMI scheme, you can easily possess a vehicle of very high amount, without paying any EMI for the credit period.
A 0% EMI scheme allows the lender to distribute the full payment for the desired vehicle in equal installments. The bank or the lender incorporates the effective rate of interest in the compound payment itself.
Although, the process of zero interest scheme is lucrative as it seems that you are not paying high for the vehicle, yet all the interest payment are included in installments itself. Before depending upon a particular fiance agency, you should ask for the terms and conditions for the bad credit rating.
Flat Rate Interest Schemes
A flat rate interest system is the traditional credit system with a monthly or quarterly fixed-rate interest payment, as per the agreement. Till the time of the maturity of the loan, the amount of the used car loan, a fixed interest payment is made. The principal amount to be repaid at the end is usually the car price.
The monthly repayments in the case of flat rate interest schemes include the interest and part of the principal amount.
When you are facing a bad credit rating due to various reasons, different lenders and auto loan financiers can help you in getting a loan approved easily.
Reducing Balance Loan Scheme
When you are getting a loan for a used car, you can opt for reducing balance car loan scheme. In this process, the total amount payable at the end of the period is calculated at the starting period of the loan. In this scheme more installment and higher interest payments are made in the starting period of the loan, leaving lesser payments for the end-stage.
Generally, the lender is smart enough to incorporate the compound tax rate in the interest itself. If you are confused, you can opt for some professional help.
Note: If you are facing a situation of bad credit rating, getting a loan approved from the bank is a complex process due to multiple norms. You can reach out to various loan agencies for easy loan approval.
There is nothing to worry about if you are facing a funds crunch along with bad credit rating. There are several auto finance agencies, having collaboration with banks who can assist you to grab a second-hand vehicle. All you need to decide the manner of payment suitable for you.