Owning a car is still an aspiration for many in India. After all, a car is an expensive purchase that can quickly drain your savings account. However, buying a used car can be an excellent investment if you cannot afford a brand-new vehicle. Plus, you can borrow a used car loanto make this purchase more economical.
At the same time, it’s also wise to review the loan agreement before you sign the papers to avoid any complications down the line. Read further to know what you should look for in a loan agreement for a used car.
Things to look for in a second-hand car loan agreement
A used car loan can help you afford the four-wheeler of your dreams. But before you sign on the dotted line, pay heed to the following factors:
The interest rate is a vital factor in determining the EMI amount you will have to pay over the loan tenure. So, you must look out for the interest clause in the agreement. Ensure the used car loan interest rate mentioned in the document is the same as agreed upon during the verification stage. It should also state the nature of the interest rate, whether fixed or floating.
Additional Read: Tips to Reduce Your Used Car Loan Interest Rate
When reviewing your loan agreement for a pre-owned car, pay attention to the repayment clause, including the flexibility and payment methods. This aspect can differ from lender to lender, and the agreement should mention it clearly. Does the lender allow online payment of monthly EMIs, or do you need to drop a cheque every month? In any case, choose the ideal EMI option that will provide a smooth repayment experience.
Loan amount and tenure
Your loan contract should clearly state the amount of loan (or the principal amount) you’ve borrowed from the lender. The document will also spell out the details of the loan tenure as agreed upon by you and the lender. So, keep an eye out for errors while reviewing the contract.
Lastly, it is vital to check whether the loan agreement includes any hidden or extra charges. Additional costs on loans can sometimes make them difficult to afford, which is why you must ask your lender about them beforehand. Also, avoid any add-ons for the car and negotiate with the lender to reduce some charges.
Additional Read: Different Ways of Financing a Used Car
While choosing a second-hand car, make sure to pick a vehicle in good condition, with a high resale value, and from a good dealership.
And if you’re looking for a loan to finance the car purchase, look nowhere else! With Tata Capital’s relaxed used car loan eligibility criteria, you can apply for a second-hand car loan online without any hassle
We also offer different repayment options to make it easier to pay off the loan. Figure out your monthly instalments for free by using our used car loan EMI calculator here.
Contact us to receive financial assistance and bring home your own car!