Things to Check Before Taking a Pre-owned Car Loan

by Nisha Scott Account manager

A pre-owned car loan is nothing but a car loan borrowed to purchase a used or second-hand car. Nowadays, more and more people prefer to commute in their own car instead of using public transport. And the reason for this is obvious. The Covid-19 pandemic has made people wary of travelling in public vehicles, and no one knows when the risk of travelling in public transport again will come down

Owning a car just makes things easier and safe. And many people prefer buying a used or pre-owned car instead of a brand new one. And the most common way to do so would be via a pre-owned car loan. But before you go for a pre-owned car loan, keep the following things in mind.

· Your Budget

It is optimum to first set your budget for a used car based on your spending capability. Many times when it comes to cars and gadgets, one can be tempted to purchase things above one’s means. So instead of deciding on a car and then setting your budget, first set your budget and decide on a car. Find out the pre-owned car loan interest rates and factor them into your budget. This will ensure that the EMIs for your car loan would be affordable and not burden your monthly income.

Consider the Loan Amount

The loan amount for a pre-owned car loan is most of the time decided by the lender based on your income as well as the value of the car in question. The loan amount is usually 70-80% of the value of the car. You must carefully consider the loan amount since your EMIs and tenure would be based on it. An unnecessarily high loan amount could burden you with high EMIs or a long tenure.

Tenure

In India, the maximum tenure for a pre-owned car loan is 5 years. The lender usually decides the tenure of the loan based on the condition and age of the pre-owned car. An older car that requires more maintenance would attract a shorter tenure and vice versa. A thumb rule, in this case, is to avoid buying a car that is older than 5 years since that could go unfavourably with your lender, and they may offer a short tenure.

Get the Car Inspected

Before you go ahead and get a pre-owned car loan, ensure the car is in tip-top shape. The very reason you’re buying a used car is to save on expenses, and if the car is not in good condition and is costing you too much on repairs and maintenance, then your efforts will go in vain. So get a quality mechanic to inspect the car and assure you that it’s in good shape.

Ensure The Car’s Paperwork Is In Order

You must also make sure that the car’s paperwork is complete and valid. Lenders evaluate the paperwork carefully since it will be required for the transfer of ownership. Check the registration certificate, PUC certificate, taxation book, etc. and ensure everything is in order.

You must check the above things mandatorily from your side even before applying for a pre-owned car loan. Once you’re sure that everything from the car’s condition to the documents and your own budget and expectations is set, then you can go ahead and apply for car loan. That will just make things easier.