If you’re planning to take a loan to buy a used car, there are certain things you need to consider before taking the plunge. By asking yourself the right questions, you can ensure that your loan repayment is a smooth and hassle-free process. Here’s what to ask when buying a used car.
#1 Is the loan amount in line with my repayment capacity?
The first question you should be asking yourself is whether you will be able to repay the monthly instalments on time. You can rely on a used car loan EMI calculator online to check your potential EMI amount. Then, try deducting the estimated amount from your monthly income and see if you can meet other expenses easily.
#2 What is the final cost of the loan?
One important question to ask before buying a used caris if you can service the loan without difficulty. A loan is not simply about the principal amount and the interest applicable. It also includes other miscellaneous expenses such as processing fees, documentation charges, and more. Make sure you factor in all these costs to get an accurate estimate of what the loan will cost you overall.
Additional Read: 4 things to keep in mind before you buy a second-hand car on loan
#3 How much down payment should I pay?
When availing of used car finance, you should always aim for a balanced EMI with a tenure that puts zero to minimal pressure on your monthly budget. Ideally, you should make a 10% down payment to enjoy a comfortable tenure. But some lenders may even ask you to put down a 20-30% down payment to get the loan. In any case, make sure you’re on the same page as the lender.
#4 Can I make prepayments without any penalties attached?
Over the loan’s tenure, you may want to prepay the loan if you have surplus money at hand. However, several lenders charge a penalty on early payment or closure of the loan. Therefore, it is important to ask your lender about the prepayment penalty, if any. Also, you should compare between lenders and choose one that charges minimal prepayment charges so you won’t have to pay a hefty fine if you decide to close your loan early.
#5 What is the documentation needed for the loan?
Lenders typically use the document verification process to assess your used car loan eligibility. Therefore, make sure to ask a list of documents from your chosen lender to ready the paperwork. Also, make sure you present all the paperwork correctly and in a transparent manner for swift loan approval.
#6 What is the best interest rate I can get in the loan market?
The used car loan interest rates charged by your lender will significantly affect your EMIs. Make sure to compare different lenders and go with the one offering competitive interest rates so that you can enjoy lower monthly payouts. Besides, maintaining a good CIBIL or credit score can also help you bag favourable interest rates.
At Tata Capital, you can apply for a used car loan for a wide range of car models, from family hatchbacks to premium sedans. Enjoy flexi EMI options, competitive interest rates, and minimal documentation for a comfortable repayment experience. For more information, connect today!