When it comes to buying a vehicle today, you are spoilt for choice. The competition amongst automobile manufacturing companies is soaring, resulting in more options at affordable rates. The second-hand car industry is growing by leaps and bounds. Gone are the days when buying a used car was a challenge. Millennials especially tend to change cars after every few years resulting in the continuous addition to the pool of used cars. Today, you can not only buy it from the owners, but also from the certified used car dealers.
Buying a used car loan is not as difficult as it used to be. However, if you are planning to buy a used car on a loan, there are a few things you must keep in mind so as to make your purchase smooth and quick.
Here are some of the things you must consider while buying a used car on loan:
1. Check your eligibility
There are different eligibility criteria for salaried and self-employed professionals in terms of income and the number of years of employment. So, make sure you check if you are eligible for the pre owned car loan. [Check your eligibility on our Used Car Eligibility Calculator]
2. Double check your documents
Once the eligibility check is done, make sure you have got all the documents you need to apply for the loan. For example, you’ll need identity proof, age proof, address proof, income proof, and signature verification proof.
3. Pre-determine the budget
Decide the car you want to buy! A wide range of makes, right from the low budget small cars to the high-end SUVs, is available to you. To select a car, you must decide upon your budget first. So, make sure you determine your budget based on your income and the EMIs that you can afford to pay.
4. Analyse your credit report
Make sure your credit score is more than 750. The chances of getting your loan approved increases with a good CIBIL score, no matter how many loans you have taken in the past. The only condition is that you must have paid all the EMIs on time. [Calculate your CIBIL score]
[Read about our tips on increasing your CIBIL Score]
5. Make short tenures
The value of the used car keeps depreciating as it ages. The sooner you sell it, the more value you will get for it. Moreover, you will have to pay less interest in short tenures as compared to the long ones. So, it is advisable to make your tenure short so that you can clear off your loan soon.
6. Be aware of scams
It is always a good idea to buy from a reputed dealer otherwise there are chances you might be lured by fraudulent offers. They might want to sell off the cars that have met with an accident. They might fleece you with high-interest rates claiming that your credit report is bad. So, make sure you do your homework before you speak to the dealer and be aware of scammers.
Banks and other financial institutions understand people buy a used car for various reasons. So, these days, banks have a variety of used car loans with attractive offers and low car loan interest rates. Don’t hesitate in buying a used car on loan. Just keep the above-listed tips in mind to avoid the common mistakes people commit while getting loans for used cars.