Of recently, the used car market has seen a considerable acceptance among car buyers. This has brought in the trend of seeking used car loan. There are many attributes owing to the increased sales of used cars and rising graph of used car loan applications. The car buyers of the present age do not make a purchase with the intention of using the car for a decade. Rather, these days a car is bought with the intention of using it maximum for three or four years. This is mainly because automobile manufacturers have become tactful in introducing their new launches with a competitive price, new design, and innovative technology. So, car enthusiasts and customers with buying power tend to change their vehicles every couple of years. This new trend of owning a car has resulted in increased number of used cars in the market.
Deciphering the above-mentioned, there is a reason to cheer for buyers of second-hand cars. Since these cars are used sparingly; most of the used cars remain like new. So, when you purchase a pre-owned car you may just get an almost new car at a much lesser price. In addition, the current market for used cars ensures that all the cars in the display are serviced to perfection with all quality checks done leaving no room for any complaints. Also, with more number of authorized dealers coming to play, the reliability factor of used cars is much higher in comparison to yesteryears. These dealers also provide additional benefits like giving a warranty period, clear documentation of the purchased car, and financial assistance.
Though the price of a pre-owned car is lesser than that of a brand new car; yet the price will run into lakhs. And, more often than not, you would consider applying for used car loan. A car loan is similar to other loans like home loan, personal loan and the like. It has the same factors such as eligibility, interest rate, EMI, loan term and so on. As a loan applicant, you must understand that there are few variations between a car loan for a new vehicle and car loan for a used vehicle.
So, here are few quick tips to remember when you apply used car loan.
Firstly, you cannot buy a car entirely on loan. Hence, you must arrange for at least 10-20% of total amount to give as down payment. More so, because even the car dealers and the car loan lenders prefer that you make a down payment of at least 10-20% at the time of purchase. Along with this, you must remember that the higher down payment you pay, the lesser loan you have to take and lesser will be the EMIs.
Secondly, car loan has interest rates too. The interest rate depends on how many loans you have sought. So, the higher your loan amount, higher will be your EMIs and interest rates, and vice-versa. Hence, don’t shy away from negotiating with the dealer or the lender!
Thirdly, to qualify for a used car loan, the age of the car is an important consideration. Generally, lenders prefer to clear loan applications for cars lesser than five years. Another catch to this is, for your loan to get approved the age of the car and the loan tenure should fall within the duration of eight years. For example, if the age of the car is three years then the loan tenure has to be within five years. Similarly, if the age of the car is five years then the loan tenure has to be within three years. Basically, either way, it has to add up to eight or less than eight years.
Well, then, remember to keep in mind the above-mentioned aspects when you go to apply used car loan.