Are you planning to buy your first car? If so, it would be wise to get a used car than a new one. The reason is that you can get your dream car at a lesser price without comprising the brand and model. Given the current market prices, getting a used car is a much more affordable proposition. Besides, if you are unable to manage your finances, you can apply for a used car loan. It is a great way to manage your finances without putting any burden on your savings. 


The best part about a used car loan is that a borrower can get the entire value of the vehicle as a loan. But, it is worth pointing out that the loan amount and interest rate depend on factors, such as age, income, credit score, current financial obligations, and the condition of the used car. Before applying for a used car loan, it is imperative to use a used car loan EMI calculator to determine exactly how much you can afford to repay every month. 

Factors affecting a used car loan EMI

Equated Monthly Instalments (EMI) are a crucial aspect of used car loans.  Before submitting the loan application, you must ensure to figure an EMI amount that best suits your monthly budget through the lender’s used car loan EMI calculator.  

Here are the factors affecting a used car loan EMI: 

  • Credit score

The CIBIL score or credit score is a crucial factor in the used car loan application. It is a three-digit number that indicates an applicant’s creditworthiness and directly affects the EMI amount. After submitting a loan application, the lender checks your credit score to determine whether or not you are a creditworthy person. It enables lenders to determine the eligibility of your loan application, the fate of your loan application, and the rate of interest to be levied. The minimum CIBIL score requirement to get a loan is 750 but, if you wish to bring down the EMI amount, you will need to maintain a score above the said range. 

  • Loan tenure

The loan tenure has a direct relationship with the EMI amount. Opting for a higher loan tenure will result in lower EMI. However, keep in mind that you will have to pay higher interest in the long run. To reduce the total cost of borrowing, it is better to choose a shorter loan tenure. This way, your EMI may increase, but you will end up saving significantly on interest.  Before applying for a used car loan, make sure to make the best use of a used car loan EMI calculator to choose a loan tenure within which you can comfortably make repayments. 

  • Down payment

Not all lenders in the market offer up to 100% of the vehicle’s market value as a loan. Some lenders offer up to 70% to 80% of the used car’s value as a loan. It means you will have to pay the remaining 20% to 30% as a down payment.  

The higher the down payment, the lower will be the loan amount, and a lower loan amount fetches lower EMI. So, if you have the funds, it is better to pay at least 40% of the loan amount towards the down payment.

  • Co-signer or Co-applicant

Another factor that has a direct impact on a used car loan EMI is the co-signer. The co-signer significantly reduces the burden of repayment. So, if you have a low or bad credit score, you can get a co-signer with an excellent credit score. This way, you can secure a lower interest rate on your application. 

  • Late payment

It is common among borrowers to forget repayment or run out of funds to pay their EMI on time. In the case of late payment, the lender levies a late payment fee, which adversely affects the used car loan EMI. So, while making repayments, it is imperative to be on time. Making timely repayments allows you to avoid late payment penalties. Besides that, missing timely repayments can also reduce the credit score to the extent that getting a new loan in the future may be impossible. 

  • Used car loan EMI calculator

Every lender has an online used car loan EMI calculator that can be used to determine an affordable EMI amount before applying for a loan. The perk of using the online EMI calculator is that it enables you to assess your needs and determine your affordability by entering the loan amount, interest rate, and loan tenure. 

In summary 

If you want to buy your first car, it is better to apply for a used car loan to manage your finances. A used car loan comes with a lesser EMI burden than compared to a new one. However, keep your credit score high and prove your loan repayment capacity to the lenders to grab an affordable rate of interest on the EMIs.

Apply for a used car loan now and manage your EMIs better with the above-mentioned tips.

By Adam

Leave a Reply

Your email address will not be published.