Steps To Apply For A Used Car Loan
Purchasing a car is a big investment and has the potential to deplete your savings. If you are thinking about getting a used car loan, make sure you are following the steps below to avoid turning your car debt into a stressful liability.
With the second-hand car market booming at a meteoric speed, it transformed the age-old perceptions about owning a car. Today, big brands have delved their foot into this ripe market, thereby raising the bar of customer experience with their second-hand car purchase. From fully serviced to newly coloured, today used cars are as good as the new ones. And one thing that has undoubtedly fuelled this growth is the ‘used car loan’ scheme from leading financial institutions.
A used car loan is ideal for you if you are planning to buy a luxury car but it is out of your budget and you don’t mind using a pre-owned car, given it is in a good condition. Then the used car market is the perfect place for you!
Before applying for a used car loan here are a few things you must consider:
1. Ensure that the vehicle is not more than 5 years old.
2. The model you wish to buy is still in the market.
3. The used car you are purchasing should be eligible for financing.
4. Check and compare the interest rates from different financial institutes.
Steps to Apply for a used car loan
1. Decide Your Budget
When you explore the market, you will find various options in the segment of the used car. The price range of used cars continues to rise, with the advancement in features and car model. As a result, it's critical to finalise your budget before deciding on a car to buy on a used car loan. Examine your requirements thoroughly before
establishing an estimate.
2. Select Car Type
Applying for a used car loan in a rush is never a wise decision. Understand your requirements carefully, then discuss with your family and spouse the type of vehicle that will best meet your requirements. If you have a large family, an SUV is a good choice. Individuals with nuclear families or families of four may choose a hatchback
or sedan car.
3. Choose the Desired Specifications
With the advancement in the car features with each passing month, choosing a pre- owned car that was launched decades ago is a bad decision, even if you are on a tight budget. Nowadays, pre-owned cars are available with the specifications such as sunroof, automatic gears, heated seats, and so on. You may also easily find hybrid
used cars and EVs. As such, before deciding on a lender for a used car loan, first decide on the specifications that you desire in your car.
4. Inspect Thoroughly
Once you have decided on your ideal pre-owned car, now is the time to conduct a thorough inspection of the car’s interior and exterior body. Take the help of a professional mechanic to check the car's engine, battery, and other internal parts. Run an eye over seat cover condition, dent on the body, condition of the headlight, and all other essential body parts. It is recommended that you purchase a car from a certified used car dealer to avoid any unpleasant experiences.
5. Test Drive
Buying a car is a major financial commitment, and you can't rely on the dealer’s words and promises. To check if the brakes, accelerator, gears, and steering wheel are in proper working condition, take a test drive. By taking a long test drive, you will also get an idea about the car’s mileage, engine performance, and a few other
things. In case you found any problem in any of the aforesaid things, change your
mind about purchasing that car right away.
6. Negotiate
If you found any dent on the car’s body or have found a torn seat cover, make it a base for your negotiation. Make sure you have done your homework properly and have compared the price of the same car with different dealerships. Choose the dealer that offers the best price. You may also negotiate on additional features like
insurance cover, warranty, and so on. Initiate your used car loan application only after you have found the best deal on your car.
7. Conduct Research
Now that you have decided on your ideal car after proper homework, its time to conduct extensive research again, but this time on a lender. Visit the website of various lenders and look for their interest rates and offers. Compare the lenders using the used car loan aggregator’s website. If a lender offers a used car loan at a
significantly cheaper rate than other lenders, you must check for a hidden provision.
8. Check Eligibility
Before applying for a used car loan, it is important to check the lender’s minimum used car loan eligibility criteria. Visit the website of your chosen lender and check their minimum income requirement, minimum and maximum age limit, occupation status, and a few more things. Analyse your profile in the context of the lender's
minimum eligibility requirement. Apply only if you fit in the financial institution qualifying conditions. In case you are facing difficulty understanding the lender’s requirement, visit their branch or outlet and connect with their representatives.
9. Check Documents
To avoid any last-minute hassle while submitting your application, check the list of essential documents you will require while applying for a used car loan. The common list of documents includes – A valid Identity Proof (Passport / Driving License / Aadhar ID / Voter ID / PAN card), Latest Salary Slip, Latest ITR, Address
Proof, etc.
10. Negotiate
If you have a strong profile, don’t hesitate to negotiate with your lender over the interest rates and terms and conditions. If you have any additional source of income, furnish the same to the lender to obtain a better deal.
11. Apply
Once you have compared and reviewed the essential requirement and have negotiated the terms with your lender, it’s time to apply and submit your application. Following the successful submission of your application, the financial institution will verify your details, and if all the documents are in order then your loan will be
approved and the funds will be credited to the dealer's account shortly.
Final words on Financing
If you are planning for a used car loan to purchase a pre-owned car, then simply follow the aforesaid steps and never hesitate to negotiate. Also, the interest rates against your savings, investments or collateral could be lower than the general interest rates. So, ask about all their schemes before signing the papers.
