Are you planning to purchase a used car? Well, we have got you covered with some of the most important things to keep in mind when it comes to getting used car finance. You will be amazed to know that the size of pre-owned cars is 1.3 times the size of the new car market. One of the reasons behind the growth in the used car market has been the easy and widespread availability of used car finance. The growth in used car credit has been estimated to be anywhere between 15% to 30%. The primary driver for this growth has been the increasing presence of organised lenders.
If one is planning to purchase a used car, it is highly likely that this prospective buyer would evaluate used car finance. Here are four things to know before availing used car finance:
1. Compare lenders
A financial institution is an entity with the sole purpose of helping a borrower bridge the gap between her dream and her. However, it is important to choose a lender that would be able to match up to the borrower’s expectations. Thus, the most important rule when it comes to financing a used or a new car is to compare. A borrower must compare between all the lenders, and look for the one that offers customer-friendly initiatives such as flexible repayment plans, competitive interest rates, etc. For comparing lenders, a borrower can even rely on feedback given by individuals in their network who have taken car loans. There are multiple reviews available online as well which compare offerings by multiple lenders.
2. Plan for financial commitments
When it comes to repaying a large amount of money to anyone, planning cannot be underestimated. Similarly, before applying for a car loan, it is necessary to plan. The prospective borrower must use an EMI calculator to figure out the potential EMI that would be incurred. By analysing other existing financial commitments, the borrower must evaluate whether the car loan EMIs can be paid off comfortably. Apart from calculating the prospective EMI, the borrower must thoroughly research other aspects of a car loan such as service tax, processing fees, foreclosure penalties, loan repayment tenure, etc. This way, the borrower would be able to comprehensively prepare for taking on a financial commitment.
3. Arrange for Documentation
There is a set of documentation that is necessary to be fulfilled before you are approved for a new or used car loan. Prior to even looking for a used car, this can grant you a pre-approved car financing loan offer. This guarantees a lot faster processing and approval for your used car loan. This also gives you leverage while negotiating with the individual you wish to purchase the vehicle from, which can help you get a better deal, as you will be in a much better place while bargaining.
While looking for used car financing, you will have to arrange for the following documents
- Proof of residence, for example, your rental or lease agreement, passport, voter ID, etc
- Age proof and photo ID: For example, aadhar card, passport, ration card, etc
- Signed application form
- Bank statement of 6 months or over
- Salaried people require to submit a form 16
- Self-employed persons require a deposit of their income tax returns of the last 3 years or over.
4. Keep an eye on offers and deals
Lenders normally employ numerous different offers as a promotion to increase the number of people who would be interested in the loan product they are trying to sell. Each lender will have many attractive offers and deals when it comes to financing a used car. To get the best deal, one of the most important factors is to be on the lookout for them, especially during festive seasons when most deals are offered by the lending institutions. Lenders may offer discounted interest rates. Other charges such as processing fees might be waived off for a new or used car loan.
A used car that is bought from an established dealer can be a fantastic purchase. One can use the tips given above to secure an attractive deal from a credible lender. It would be prudent for a prospective buyer of a used car to create a checklist of things to do keep in mind while applying for a used car loan.