We Indians are just concerned about one thing, and that is the word “budget”. From buying vegetables to purchasing a car, we never forget to bargain with the buyer. This habit helps us obtain a better deal, but it also encourages us to save. But do we do the same thing with our loan? Have you ever negotiated an interest rate with your lender?
If you are buying a used car because of a financial limitation, why are you hesitant to negotiate the interest rate on your used car finance? If you still don’t want to negotiate, there are a few things to consider that can help you seal a better deal on a second-hand car loan.
Now let’s start with the factors and after that, you will get the procedure.
Factors to Consider Before Applying for a Used Car Loan
- Explore the options-The interest rate on used car finance varies from one lender to the next. It is advisable to do your homework on various financial institutions to find a better deal that suits your budget. Always remember, this factor plays a crucial role in deciding the loan repayment amount. Apart from this, you must also check the lender’s credibility. There are chances that your lender might lower the interest rate but increases the other charges associated with your used car loan.
- Down Payment- The down payment amount plays a crucial role in determining your loan EMI. It is one of the most important factors in your loan approval process. The more you pay as a down payment, the more it reduces your loan amount. Nowadays, lenders are offering loans on a used car for as much as 95% of the on-road price. However, the loan to value ratio varies from one lender to the next.
- Fees- While applying for a used car loan, your lender charges you with different types of fees. These charges include loan processing fees, verification charges, and a few more. The lender usually charges the fees in the percentage of your loan amount. Aside from that, if you intend to make a pre-payment or file for loan foreclosure, the lender will charge you.
- Re-payment Scheme-The repayment plan is an important factor to consider when taking out a loan. When you avail of a loan from a reputable financial institution, you can rest confident that your EMIs and other terms will be flexible. It enables you to pay your loan EMIs promptly and simply.
- Loan Tenure- Nothing beats having a well-defined loan repayment schedule and the ability to foreclose a debt with little fees. If you have a well-structured EMI tenure, you can easily plan on your finances. You may also use an online EMI calculator that can help you figure out how much you will have to pay each month. To find the best EMI, try different combinations of Loan Amount, Rate of Interest, and Tenure. For one, you would need to ensure that you have sufficient liquidity every month to meet the EMIs payable. Another essential consideration can be the maintenance of a healthy debt to income ratio so that you can meet the monthly liability without straining your finances.
These are some of the factors that you must consider before applying for used car finance. However, apart from the lender, the car you are planning to purchase also needs some thorough inspection. Want to know how? Consider the below-mentioned factors that have a direct relation to your used car loan.
- Ownership papers-Check the ownership document to see if the vehicle is under the possession of the original owner or a thief who has stolen it from someplace.
- Insurance Documents- Examine the insurance documents for the used car you are about to purchase. You will be able to tell if the car has been in any accidents or if there have been any claims related to it. Also, if the pre-owned car has insurance, chances of getting a higher loan amount at an affordable rate are high.
- Car Condition- Always inspect the condition of a car thoroughly. Look for dents, bruises, brakes, and everything that defines the car’s worth. You must also take a test ride to ensure that the car is running fine and is giving a satisfactory mileage. As a result of all of these factors, your auto loan will be affected.
If you are financing your ideal car with used car finance, keep the above variables in mind because they will help you get a better deal on your second-hand car loan. This is all about the second hand car loan. If anyone has any difficulty in the procedure above feel free to contact us. Also, let us know your valuable feedback. So that, we can improve our service.
Learn more about loans and finance from the official website of HeroFinCorp.