What factors are considered in calculating a used car loan?

There are many factors that go into calculating your used car loan. Let us look at the necessary information below.

• Market value of the car: Lenders rely on professional valuation and inspection, and your loan amount is usually a percentage of this value (called the loan-to-value or LTV ratio).
• Applicant’s income: Steady income means better chances of repayment—no surprises there.
  •    Credit score and debt-to-income ratio: These show if you’re good at handling loans and bills on time.
• Vehicle condition: Age, mileage, service history, all matter. A well-maintained car gets you better terms.
• Loan tenure and interest rate: Longer tenure lowers monthly EMIs but adds up interest; interest rate starts from around 10% p.a.
• Employment status & residence stability: Some lenders check if your job is permanent and your living situation is stable.
• Past loan repayment history: A clean record speaks volumes.

All these bits come together to decide how much you get, how long you’ll pay, and at what cost, it is there to protect both you as well as the lender. So, keep these in mind before you dive in!