How to Plan Down Payment to Purchase a Used Car?

Buying a car is one of the most euphoric experiences one can have in their lifetime. Be it a new or used car, the experience always stays the same. Nowadays, buying a car has become a straightforward task due to the availability of various financing options. 

When you plan to finance a new or a used car, you are often required to provide a certain portion of the car's value as a 'down payment'. The down payment you need to make usually depends on the price of the car, model, and age.

However, there are several other factors you need to keep in mind when making the used car down payment amount. This blog will discuss how to plan a down payment to purchase a used car.

Benefits of a Used Car Over a New One

Here are some of the most essential benefits of buying a used car over a new one:

1. Slower Depreciation Rate

The value of a car starts to depreciate from the moment you drive it out of the showroom. Almost 30% of its value is lost within the first few months of its purchase. If you are worried about the depreciation of value, it is best to buy a used car. Since it has already experienced the maximum possible depreciation, it will not lose that much value in the next few years.

2. Minimum Insurance Costs

Insurance companies determine the premium of a vehicle depending on its current market value. As the old cars have already gone through significant wear and tear, it signifies that they have lost their value. Depending upon the age and condition, the insurance companies will determine its premium cost.      

3. Saves Money

If you buy an old car, you will be able to save a significant amount of money as the cost of these cars is a lot cheaper than new cars. If you are looking to buy a used car, various retailers provide certified cars in optimum condition. Also, they provide various options from which you can choose to save money.

4. Lower Registration Fees

When buying a new car, registration fees take up a chunk of the total cost of the vehicle. If you opt to buy a new car, you can save substantially. In some states of India, the registration fee for old cars is about one-fourth of new cars.

5. Easier Financing and Lower Down Payment

If you are worrying about getting the financing for buying an old car, do not worry, banks and NBFCs offer Pre-owned Car Loans with minimum eligibility requirements. Also, financial institutions charge appropriate interest rates that everyone can afford, and they also ask for a lower down payment to approve the loan.  

When looking for a Pre-owned Car Loan, NBFCs like Poonawalla Fincorp emerge as one of the top financial institutions in the country. It is trusted by millions of customers spread across the country.

Also Read: The Best Time to Buy An Used Car

How to Determine the Down Payment Amount for an Old Car Loan?

Following are some of the most important steps you should consider when determining the down payment amount for the purchase of an old car:

• Step 1: Determine How to Finance the Car

Choose how you are going to pay for the car. It is suggested that you fund your car purchase by availing of a Pre-owned Car Loan as it will not create a significant dent in your savings.

• Step 2: Enquire About the Required Down Payment

There are several conditions attached to the down payment amount. The amount of down payment you make will determine the interest rate you pay for it. Ask your lender about the required down payment amount with the interest rate you will get for the loan.

• Step 3: Calculate the Funds You Have

Calculate and figure out how much money you have acquired in total from your savings and investment to pay for the down payment of the Pre-owned Loan.

• Step 4: Determine Your Monthly Payments

Determine how much money you can afford to pay for the loan every month. EMI or equated monthly instalment is the amount you need to pay every month to repay the loan amount.

How can I Reduce the Down Payment Amount?

Usually, the down payment on a new car is 20% of its value. For a pre-owned car, the amount is 10% of the car’s total value. If you wish to reduce the down payment amount, there are a few options that you can consider.

1. Trade Your Current Car

If your current vehicle is in good shape, you can trade it at the dealership for the credit toward your used car. The amount you get from the trade-in will be used as the down payment for your next car, which means no additional funds will go out of your pocket.

2. Look for Cash Incentives

Car dealerships and automakers launch exciting offers and cash incentives to attract new customers. Keep checking which dealership or pre-owned car company is offering discounts and deals to make the most of your auto financing.

3. Pick a Less Expensive Car

If you feel that your budget will be stressed because of the down payment, you can shuffle your choices and pick a less expensive car. The lower the retail value of the car, the lesser will be your down payment and interest rate, in case you consider getting a Pre-owned Car Loan. You can downsize to a smaller car, choose an older car, or choose a less equipped version of your preferred car.

Also Read: Top 5 Factors Affecting on Price Of A Second-Hand Car

How to Apply for a POC Loan Online?

Poonawalla Fincorp offers one of the best terms and interest rates for a Pre-owned Car Loan. Here are all the steps you need to follow to apply online:

Step 1: Press the ‘Apply Now’ button to provide your essential details

Step 2: Upload all the necessary documents.

Step 4: Finally, click on the ‘Submit’ button.

Wait for the application to be verified and assessed. Poonawalla Fincorp will send you the confirmation and the approval of the loan amount within a few hours.

To Conclude

As the used car market in India is gaining ground, one can consider buying a pre-owned car basis the advantages they offer. Various automakers are also improving their products and services to benefit from the growing trend of pre-owned cars. If you wish to buy a used car, keeping the down payment on the lower side will help you navigate through potential financial burdens that might arise in the future.

Poonawalla Fincorp’s Used Car Loan is easy to avail, with a digital application process and quick disbursal. We offer high-value sanctions for the purchase of a wide range of used cars, with minimal documentation and competitive interest rates. Avail of a Pre-owned Car Loan from Poonawalla Fincorp now!

Frequently Asked Questions

• What is the minimum amount can I pay as a down payment for a Pre-owned Car Loan?

There is no particular minimum down payment amount you need to pay. Generally, lenders ask for a minimum of 20% to 30% of the car’s value as a loan down payment. 

• What type of cars can I buy with a Pre-Owned Car Loan in India?

You can buy various kinds of cars, such as SUVs, premium cars, hatchbacks, and sedans with a Pre-Owned Car Loan from Poonawalla Fincorp.

• What are the tax benefits on used car loans?

When your car is being used for business purposes or you are self-employed, you can save a lot of money on taxes. When you utilise a car loan for a business vehicle, the interest you pay will be calculated as a business expense in the books and you can avail deductions as tax benefits.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply