Getting a loan for a pre-used car? Keep these things in mind!
Used car shopping can be the best financial plan you can make if you cross the path of an individual seller who possesses documents proving the vehicle's service life and fails to hide any defects. Nevertheless, the process of acquiring a car loan for a pre-owned automobile is the major determinant of success. Different from purchasing a new car that sees interest more in line, buying a preexisting car necessitates a keener comprehension of factors like credit score, car evaluation, loan plan, and paperwork requirements.
In this blog, we will figure out the necessary elements you will have to take into consideration when applying for a loan for a used car.
A lot of times, people don’t want to invest in a new car but get a pre-used car at a great price. It is during times like these that you need to ask your lender to give you a loan on a car already owned and used by someone in the past. You might think that car loan EMI for such purchases is lesser but that might not be the case.
Read on to know everything that you should that will influence you to get a loan for a pre-used car and how you can be well-prepared to apply for it.
To get a car loan EMI at a good rate, it is essential that you have a good credit score. A credit score is nothing but a past history of the repayment of your loans, credit card bills, etc. If you have not faltered much and paid all your bills on time, your CIBIL score will easily be above 750. That is a good number to get a car loan easily. If not, you might face problems getting loan approval.
Since you have set sights on a pre-used car, you should make sure you know its market value well before making the purchase. To perfectly gauge this, you should know about the kilometers traveled, vehicle modifications done to it, commercial or personal usage, etc. These factors determine the cost at which the pre-used car should be sold, which in turn would decide the rate of interest on your car loan EMI.
You should be absolutely clear of the breakup of your loan and what you’re being charged for. Loan tenure plays a very important role, especially when it comes to repayment. Usually, the tenure varies between 3 to 5 years but in some cases can also go up to 7 years. The rate of interest is another pivotal factor to consider. You should always aim at associating with lenders who will give you lesser ROI. Also, if you make a higher down payment, you will have to pay a lower rate of interest considering the loan tenure will reduce drastically.
You must consider multiple lenders when applying for a loan. Different banks or individual lenders offer different rates of interest, car loan EMI amount, etc. You should be specifically careful about this choice when purchasing a pre-used car because there is a third party involved- usually an individual who had to be paid for the car purchase.
The documents needed for a pre-used car loan are different from the ones needed for a loan taken for a new car. Here’s a list:
With some research, you can land yourself a good lender who provides you a good rate of interest on car loan. Keep these factors in mind when purchasing a pre-used car.
To sum it up, be ready to take informed actions regarding the loan for a second-hand car. For example, a good credit rating will place you in a better position, consider the car's appraisal value, and the characteristics of the loan agreement, and have all the required documents to make the approval process easy. Do your research by visiting lenders' websites and taking advantage of the compare lenders function to be sure that you make the most out of your money. Choosing the right path and being ready for it will allow you to afford your pre-used car and provide you with self-assurance for the start of the adventures.