All You Need to Know About Used Car Loans

Do you want to buy a used car but are not sure of where to arrange the finance? Then, you should be looking at getting a used car loan. And, here are the tips for getting the loan.

Owning a car is the dream of every individual across the country. A study conducted by Mahindra First Choice Wheels shows that the used car market has grown, and it has overtaken the new car sales. In the year 2018-19, the sale of second-hand car market crossed 4 million units, while for the new cars the figures stood at 3.4 million units. With such growth, it is but evident that the availability and competitiveness with regards to a loan for used cars has also grown.

If you have shortlisted a second-hand car, you can get a loan to turn your dream into a reality. But, how do you get the loan? What are the things you need to keep in mind to get a loan? Continue reading this article to get the four most important tips you should follow:

Tip No.1– Keep Your Credit Score High

Your credit score is the most critical piece of information that a bank or NBFC will consider before sanctioning your loan. It is given by CIBIL  and ranges between 300 and 900. About 650 and above is deemed to be good, and if yours is lower, first improve the score. The best way to improve the score is to ensure you pay all your loan EMIs on time and other dues on time. It takes about six months for the impact to show, but, once the score crosses the minimum benchmark, it should be easy for you to get the second hand car finance.

Tip No. 2 – Research the Lender

One of the biggest mistakes, people tend to make is to choose a lender without doing any research. Research requires you to visit the website of the bank or NBFC, read about their rich history and then make a choice.  You should put more faith in a well-established company with years of experience rather than a new company. Additionally, talk to the NBFC’s representatives to know the value they place on listening to and interacting with their customers.

Tip No. 3 – Know the Loan Terms and Conditions

When taking a loan, it is of utmost importance that you study the loan terms and conditions in detail. Go to the NBFCs online page where all the information with regards to second hand car loan is given. What are the income requirements? Go through the section detailing the documents you have to submit? Can you apply for the loan online or do you have to visit a branch or office to complete the process? All these questions are important to know whether you fit the eligibility criteria for getting a loan.  

Tip No. 4 – Use the Online EMI Calculator

All NBFCs today offer online calculators which you can use to know the EMI you will have to pay for the tenure. Though the loan tenure can vary across banks and NBFCs, there are enough variations provided by them. All you have to do is input the loan amount, the interest rate applicable and the tenure, and within a few seconds, you will know the equated monthly instalment. Remember, if for some reason you miss paying the EMI, it can lead to a penalty or late fees. It is essential you choose an EMI that is comfortable to you and does not put a strain on your monthly income.