In recent times, there has been a huge shift in the trend of owning a car. Nowadays, people don’t look at keeping a car for 10 to 15 years. Rather, the trend has changed to purchasing a new car every few years. And, more so because of the competitive price, new design, and innovative technology employed by automakers in every new launch. This trend has given rise to a number of used cars in the market. The good thing is these cars have been sparingly used and come at a price much lower than a new car. In addition, the reliability factor of used cars these days is much higher compared to yesteryears. Along with authorised dealers of used cars, many auto brands have their own used car segment too. And, buying a pre-owned car from such dealers gives the additional benefits of quality checks, warranty, documentation, and financing assistance.
Indeed the cost of a car comes down once it is tagged as pre-owned, but it will still be within the slab of lakhs. So, when you have bought a car in mind, taking a car loan will be a definite thought that will cross your mind. Like any other loan such as home loan, personal loan etc., used car loan also has criteria related to interest rate, EMI, loan term etc. So, if you opt to buy a pre-owned car by taking a used car loan then here are few considerations you must make a note of.
Certainly, you can buy a car entirely on loan. So, you have to make a down payment of a certain amount.
1) First, most pre-owned car dealers and car loan givers prefer that the customer makes a down payment of at least 10-20% of the total amount. Hence, make sure that before you apply for a used car loan; evaluate your payment capability for the down payment as well as for the monthly EMI.
2) Second, alike other types of loan, there is an interest rate attached to used car loan too. This means that lower your loan amount, lower will be your EMIs and interest rate; and this calls to make a good negotiation with the lender. It also indicates that the higher the down payment you make, the lesser you have to spend on loan interest.
3) Third, the age of the car is an important criterion when you want to apply for a used car loan. It has been observed that most lenders would not be willing to give a loan for a car that is older than five years. Also, you must remember that for your used car loan to get approved, the age of the car and the loan tenure should not exceed eight years. For example, if the age of the car is five years and then the loan tenure has to be within three years. Similarly, if the age of the car is two years then the loan tenure has to be within six years.
The above considerations were a gist of the factors one must pay heed to before going to apply used car loan. To get a good car loan deal, you must be open to negotiating with the pre-owned car dealer and also with the lender. There is always room to strike a good deal and own a car. And, with the advantage of the low price for a popular brand car along with all features and warranty intact, it definitely becomes worth a try. So, go ahead, select the car you want to buy, walk into an authorised pre-owned car showroom, strike the best deal and own the car of your choice that could range anywhere from an SUV to a hatchback.