Be it a second hand car in Ghazipur or a new one, owning a car can be a matter of great elation. In recent years, the interest rate charged on a new car loan is cheaper than that of a second-hand car. This has brought people into a difficult spot since new cars are generally more costly than second-hand ones. So, is there something that can be done about the high-interest rates? In order to help you get behind your dream car, Car Kharido Becho extends low interest second-hand as well as new car loans. In this blog, we will tell you how to reduce the interest rate for your car refinance in Ghazipur. So, without any further ado, let’s get started:

How is the interest rate decided?

First things first, how is the interest rate decided? Well, the interest rate charged on a loan is based on a couple of factors. These include:

• Credit score

Almost every lending institute runs a credit report check that evaluates your credit score. This includes your closed and current credit accounts, the history of payments made, and the length of your credit usage.

• The ratio of debt to income

t is a simple way to understand the amount of money you owe to various lenders in ratio to your total income.

• Size of loan and down payment 

The size of your down payment also affects your car refinance in Ghazipur. A larger down payment means favorable terms and conditions.

• Age of the vehicle

The age of the vehicle affects lending rates as the value of the vehicle is an important consideration. Some cases involve a newer vehicle being quoted higher in order to sell car online Ghazipur.

• Tenure of the loan

The customer has to pay smaller EMIs when loan tenure is longer due to a bigger payout duration. The EMIs increase when the loan tenure gets shorter. 

In order to make sure that the interest rate charged is pretty decent, one has to work on these factors only.

Tips to reduce the interest rate on your second hand car loan

In order to get a second hand car loan at a low-interest rate, one can follow these steps:

• Pay a significant amount as the down payment.

Lenders offer loans at lower interest rates if you make high down payments. Since the principal amount is low, the EMI amounts are lesser, along with a lower loan interest rate. Of course, you can save upfront with a smaller down payment. But in the long run, it leads to a relatively higher interest rate. Moreover, paying a high down payment lets lenders know that you are financially sound and capable of repaying the loan. Now, you can also get a top up loan on existing car loan which can help you to reduce your interest rate further.

• Keep a watch on your credit score.

The credit score is an indicator of your ability to repay the loan. If you have a bad repayment history, lenders will increase the interest rates. Conversely, with a CIBIL score of 750 and more, you can get loans at a lower interest rate. Looking into your credit score can help you better assess your financial profile. Thereafter, you can take steps to improve or maintain your CIBIL score, like paying your credit card bills and existing loan EMIs on time.

• The ratio of debt to income.

The debt-to-income ratio is a metric used to determine your capability of paying the EMIs on time. It is a vital factor for lenders and helps them decide the used car loan interest rate. If you have a high debt-to-income ratio, your loan application will either be rejected, or you will be charged higher interest rates.

• A shorter repayment schedule.

Another essential factor to consider for your used car loan is the repayment tenure. While a longer tenure comes with lower EMIs and interest rates, you will end up paying more interest. It is because the total interest payable continues to increase with time.
Sounds great, no? Reach out to Car Kharido Becho 24, one of the best second hand car dealers in Ghazipur, to get a car loan. Now, you can also top up car loan Ghazipur from us. Wish to know more? Visit https://carkharidobecho24.com/.