What is the make and model of the car you are buying? Are you very excited about it? You need to take care of a few things when purchasing a second-hand car loan. People typically get loans to purchase automobiles. The fact is that almost 90% of people who buy cars do so by taking out a car loan. Because of the new banks on the market, it is easier today to get a second hand car loan.
Checklist for used car loan application
In addition, banks are gaining intense competition between themselves, so they are providing borrowers with attractive interest rates and longer repayment terms. Check out these 10 points before obtaining a pre-owned car loan:
Credit score
Loan approvals are increasingly based on credit scores these days. This is because each person’s credit score determines how likely they are to repay their loans. Low credit scores will therefore lead to a lower loan amount or higher interest rates.
Ask for quotations
You should contact as many dealerships as possible when you’re applying for a car loan. Dealers have different financial arrangements with different banks, so they quote different rates and fees. The best way to compare dealer prices and financial charges is always to visit them all in person.
Compare repayment tenures
It is important to understand how long the loan will last. Be sure to carefully consider the loan repayment period before you apply for a car loan. The bank executives will try to mould you to gain more incentives from their employer, so do not be influenced by them.
When you calculate your total EMI in 7 years, you will be shocked to learn the figures; if you think that seven years of EMI is good and as per your budget, you are mistaken. Therefore, it is best to select the shortest possible loan repayment term.
Check all additional costs.
Most financial websites offer EMI calculators. When planning your EMI, be sure to consider the EMI that will be most advantageous for you based on the given interest rate. When lenders distribute the money, they charge extremely high processing fees. On the other hand, most auto lenders grant auto loans at low interest rates.
If different banks charge any fees, you should inquire about them. The way to charge service tax cannot be questioned, but the frequency of its payment can. A lump sum is normally charged for service tax. Some banks, however, charge a yearly fee.
Make sure you ask about foreclosure penalties when taking out a loan. These penalties are unknown to many buyers. A foreclosure penalty is charged when the remaining loan amount is repaid well before the actual repayment period. Choose your bank wisely to avoid a foreclosure penalty.
Loan interest rates, offers, and schemes
It would help to compare the interest rates offered by different banks or financial institutions before applying for a car loan. Market rates are not standard, so this is of most importance. A floating interest rate is different from a flat rate and will vary from one bank to another. If the low interest personal loan rate differs by even a few points, then you’ll owe a significant amount to the bank.
There are many attractive offers and deals on car loans available from various banks. Your bank might even create a customized deal if you have a sound profile. Your loan could even come with 0% interest. Post a message on social media about your car-buying plans. The car companies may offer promotional offers and social media handles for interested shoppers.
Check and update all your documents.
Car loans can sometimes be difficult to obtain. KYC (know your customer) is followed by all banks and financial institutions when granting loans. You should have all the necessary documents with you as they verify plenty of papers and your credit history. Income proof, bank statements, proof of address, photo identification, tax returns from previous years, NOCs from previous loans, credit card statements, etc., are among the most crucial documents.
