3 Financial Tips for Buyers of a Used Car

While purchasing a used Tata Nano in Bangalore finance is the most important thing that a person has to manage. Some of them prefer to use their own savings for purchasing the car while some prefer to borrow from friends and family.

However there are a lot of people who opt to get financial assistance from banks or finance companies to buy a used car. For such people, here are a few financial tips that can make a lot of difference.

Type of Interest Charged

While a lot of people get swayed by the low rates of interest that they come across when comparing the loan from different sources, they don’t realize that the type of interest charged is different. There are primarily two types of interests charged:

  • Simple rate of interest
  • Reducing balance interest

A lower interest rate charged as simple rate can lead to higher interest repayment done over the tenure of the loan. So do not compare loans just for interest rate alone.

Early Repayment Policy

Before availing any type of loan, try to understand the early repayment policy. Some finance companies allow for early repayment but it is chargeable. Some companies will take amounts higher than EMI but the extra amount paid is not adjusted against the principal. Instead it is adjusted again the interest amount. Hence it is important to understand the repayment policies of loans.

Importance of Credit Score

You may have not bothered about your credit score so far. But the score really matters when it comes to availing a loan. If your credit score is good, a bank would be ready to give you a personal loan which is an unsecured loan. However, if your score is bad you will have to take used car loan and hypothecate your car.