Importance of Comparing Lenders before Applying for a Used Car Loan Online

Mar 06, 2017

Many banks and Non-Banking Financial Companies (NBFCs) offer finance to potential used car buyers. In order to expand their customer base, such lenders offer attractive interest rates coupled with other benefits like minimal documentation, quick processing, and customized repayment options. With numerous lenders offering multiple options, it often becomes difficult to choose the right one. Therefore, it is necessary to compare various lenders and select the one offering the most favorable terms.

Following are three reasons to compare lenders before applying for a used car loan.

1. To assess multiple offers

With the onset of digitalization, most financiers in the market have introduced online portals. This makes it possible to get a quote by either calling on the toll-free number mentioned online or drop an email asking for a quote. Once you have received multiple quotes, you can compare the offers. It is most likely that a particular lender will have a lower rate of interest but higher fees and charges. It then becomes important to conduct extensive research and then determine which lender you should select.

2. To get the lowest interest rate

The interest rate is the most important aspect of borrowing. It is the cost of servicing the loan. Some lenders may levy a high-interest rate, so as to earn a higher profit margin. Therefore, it is imperative to compare multiple lenders and choose the one offering the lowest interest rate. Remember, even a marginal reduction in interest rate helps to make significant savings as the borrowed amount is huge.

3. To compare loan terms

In addition to interest rate, it is also necessary to compare various other loan terms such as loan tenure, prepayment penalty, and other fees and charges.

  • Loan tenure
    Tenure refers to the period of loan repayment. A shorter term indicates higher installments and vice versa. Some lenders offer extended loan tenure of up to 60 months. You may, therefore, compare the loan term offered by various lenders and make your choice accordingly.
  • Fees and charges
    Used car loans attract numerous fees like processing charges, late payment charges, prepayment penalty, and cheque return charges, besides others. Therefore, you should compare and opt for the lender who levies the lowest charges.
  • Eligibility and documentation
    Every financier has a unique list of eligibility criteria that applicants need to fulfill. It is, therefore, necessary to explore various lender options and identify the ones whose eligibility criteria you fulfill.

Selecting the right lender is the most important factor when availing of a used car loan online. It helps you acquire the lowest interest rate, along with favorable terms of the loan. Once you have selected a lender, you can apply for the loan through the lender's website. Knowing how to apply for a car loan online will ensure a great degree of convenience. You may then drive home your dream car without any financial worries.