The used car market is huge due to several reasons. Many new drivers prefer buying a pre-owned car to hone their driving skills. Another reason is that the price of used vehicles is lesser than a new car. Moreover, the segment is organized with several certified dealers offering excellent deals on used vehicles.
Buying a car today is become simpler due to the availability of loans from banks and Non-Banking Financial Companies (NBFCs). The financial institutions allow you to apply for the loan online, which makes the entire procedure quick and seamless.
Here are a few things to keep in mind to ensure that your loan application is approved without any delay:
Research the available options
Today, many dealers offer certified pre-owned vehicles. It is recommended that you visit the dealer outlets and check the different models that are available. If you are buying the car directly from the owner, it may be beneficial to have a mechanic check out for any issues. This ensures that you do not have to pay huge maintenance expenses or repair costs later, which effectively increase the price of the vehicle.
Check your eligibility
When you apply for a loan, you need to meet certain car loan eligibility criteria. Some of the common eligibility norms include your age, income, credit score, and the make, model, and age of the vehicle. You may use an online calculator to determine your eligibility and to know the approximate Equated Monthly Installment (EMI) that you will have pay towards the loan repayment.
Keep the necessary documents ready
When you apply for a used car loan, the financial institutions require some basic documents, which primarily include know-your-customer (KYC) and income proof. It is recommended that you keep documents such as your Permanent Account Number (PAN) copy, salary slips (if you are salaried) or income tax returns (if you are a self-employed professional), bank statement, and residence proof. The lenders may also require the used car valuation report. If you have the documents ready while submitting your application form, the procedure is completed without any delays or trouble.
Calculate the estimated EMI
The EMI schedule primarily depends on the loan amount, second-hand car loan interest rate, and the chosen repayment tenure. An online calculator is beneficial in estimating the EMI that you will have to pay during the loan duration. It also helps in calculating the total interest outflow, amortization details, and total repayment amount. Having these details beforehand will help you to make an informed decision, and thereby, prevent any financial difficulties during the repayment tenure. Additionally, it helps you manage your finances to prevent any liquidity crises while paying the EMIs.
You may also procure pre-approval for used car finance. It provides you with a greater bargaining power with the dealer as you do not have to worry about the finances. Moreover, if you have the pre-approval, you know the amount available for the purchase, thereby helping you make the right decision by eliminating vehicles that are not within your budget. Having a pre-approval does not mean that there is a commitment. If you are able to procure a better deal, you may opt for the dealer’s financing option to maximize your benefits.