Used cars are fast becoming popular among consumers nowadays after the establishment of organised used car dealerships. As against the dicey deals earlier, the second-hand cars are now thoroughly tested, certified and well-maintained. Buying such a car by getting a second-hand car loan makes the process further simple, transparent and hassle-free.
Here are a few tips to avail an affordable used car loan:
Buy Certified Cars
Instead of going with a non-certified used car, it always makes sense to buy certified cars. Besides providing peace of mind, you easily get loans for buying them at good rates.
Go With the Shortest Duration Loan That You Can Afford
Today, even the used car loans are available for long durations. The longer the loan, the lesser is the EMI, but then the total cost goes up as you would be paying interest for a longer duration. Opt for no more than 48 months of a used car loan as it is generally the optimal period that one should pay for a car.
Get Loans from Banks
The PSU banks have low-interest rates for used car loans as against the private lenders and the difference between the rates is of good 4-5%. As many PSU banks are willing to give loans for certified used cars today, you don’t have to settle down for private lenders at a higher rate. Shop around and get the quotes from different banks, compare all of them and then go with the best.
Do Some Basic Research Beforehand
If you are looking for a good second-hand car, simultaneously start with some basic research on the loan front too. Use the internet to get a comprehensive glimpse of the interest rates, documentation required, eligibility criteria and other features. You can also use the EMI calculators to get an idea of what amount of money you can borrow and for what duration. These details will help in expediting the process once you finalise the car.
The lenders are generally willing to lend anywhere in the range of 70% – 90% of the used car’s valuation. They do this valuation either through their own valuation procedure or at times they even consider the Insured’s Declared Value (IDV). This brings a delta between the actual purchase price and the lent amount and you need to fill it from your own pocket. In case you don’t have cash, be ready with for an alternate option like taking a personal loan or something depending on your repayment capacity. You can even choose to take a personal loan rather than a car loan in case the former is available at better rates.
The whole idea is to get the loan for your used car at the best rates. If you do a little research, you will find the one that will work the best for you in terms of loan amount, interest rate, processing time and approval chances.