In today’s fast-paced world, owning a car has evolved from a status symbol to a need. Whether you need to drive intercity for an office job or visit a distant relative, commuting with a four-wheeler is simple. And if it’s a second-hand vehicle, you get to enjoy all the convenience and comfort at a lesser price too. The easy availability of financing in the form of used car loans has also raised the demand for second-hand cars. If you are planning to purchase a used car on loan, go through this article to know about the factors that you should consider before applying for the loan.
Decide Your Budget:
Buying your dream car is a significant financial commitment. The first thing you should do before applying for a used car loan is to figure out your budget. When you choose a luxurious car, you should not only increase the price, but you must also increase the down payment amount and prepare yourself for a large EMI burden.
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Also, keep in mind that purchasing a used car is a long-term investment. You will have to pay for things like the car’s repair and maintenance, insurance payments, fuel refilling, and a few other things. As a result, deciding on a budget is critical.
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Car Type and Specifications:
Nowadays, with the pre-owned car market flourishing, there are a plethora of used car dealers offering a wide range of car options. Before applying for a used car loan, you must first decide on the car type you want to purchase. You can choose from a variety of car types, ranging from affordable hatchbacks to comfy sedans to exotic SUVs. Apart from that, if you have any special requirements in mind, add them to your list. Also, decide if you wish to drive a petrol car, a diesel car, or an electric vehicle.
Choosing a car becomes a lot easier if you are clear on the type of car you want to buy or the specifications you want in your car.
Test Drive:
If you have ever bought a used car, you are well aware of the significance of the test drive. Experts say that whether you buy a new car or a second-hand car, skipping a test drive is a big no-no. A test drive allows you to get a sense of the car’s performance and condition. You can also see if the car’s seats are comfy for your body and if the brakes and steering are in good working order.
Apart from that, test drives can help you evaluate the pre-owned car’s safety features. In case you have any concerns regarding the car’s condition, you can take the help of a certified mechanic. As such, before availing a used car loan, take this step.
Negotiate the Price:
Always remember that the lower the car’s price, the lesser the down payment and funds requirements will be. When buying a used car, never be afraid to bargain. If you discover a dent or a few other parts that are not in good functioning order, use them as a reference point for your negotiations. Also, compare the prices of the car you want to buy across various dealerships in your area. If you think that the dealer is offering a poor deal, simply take a step back from that showroom.
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Research on Lenders:
Nowadays, arranging funds to purchase a used car is no longer a tough task. There are many financial institutions that offer used car loans in India. As such, it is advisable that you run a thorough check on various lenders for second-hand car loan interest rates and offers. Make a list of 5-6 lenders whose offerings are well within your budget. Following the preceding step, review the minimum eligibility requirements and documentation procedures of your preferred lender. If required, reach out to the lender’s representatives directly to clear your doubts. Also, check the loan disbursal time with the lender. To make an informed decision on a used car loan lender, you can also take the help of a loan aggregator website.
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Focus on Loan Amount:
Always keep in mind that the interest is not the only factor that determines the best used car loan deal. What if you obtain the best interest rate but not enough loan amount? In this situation, how would you handle your car purchase? Therefore, before you sign your used car loan application form, make sure the amount you are provided with is enough to finance your purchase.
Do Not Ignore Loan Terms & Conditions:
Before applying for a used car loan, check the lender’s terms and conditions. Check if there is any hidden clause in the loan agreement. Also, discuss the loan repayment terms and flexibility in EMI with your lender.
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To Conclude
Now that you are aware of the various factors to consider before purchasing a used car with a used car loan, apply for one right now. Make sure you understand your need and repayment capacity accurately. Research and compare lenders online before you know who to apply with.