Purchasing a second-hand car is quite easy today compared to a few years back for several reasons. For one, the used car market has expanded far and wide, enabling easy access to these vehicles. Secondly, many used cars provide good value for money as despite the price cut down to almost a half, these cars are available in a near-new condition. Further, second-handed car purchase has been simplified more than ever with the introduction of financing options like a used car loan. Since financing can be quite a concern for used car ownership aspirants, the loan option brings a fresh breath of air to many people’s lifestyle aspirations.
These advances simplify car purchases for many who considered such funding usage totally out of the scope of their incomes. Car loans come with several benefits that the user can take advantage of once they have availed of the financing option. Nevertheless, these loans come with some intricate details that one must know before borrowing. Let’s find out some aspects that must be considered before applying for the purchase of a second-hand car on EMI.
The Choice of Used Car for Purchase
When planning to avail of a loan to purchase a used car, there are some crucial details that one must be aware of. Given below are listed some of them.
1. Go for a thorough checking of the car to be purchased
Before deciding on the car that you would purchase, make sure to take it through a thorough check regarding the condition of the vehicle, any repair that it has undergone, and any other defect or default that the vehicle carries. This will help assess the marketable value of the vehicle, thus enabling a better assessment of the amount to avail under a used car loan.
2. Check the history of the vehicle
Being used previously, the car also bears the possibility of being involved in accidents or having any service issues. These factors are considered risk to the vehicle, bringing down its sale-purchase cost, thus impacting the amount of loan as well.
3. Collect the documents needed
A used car also carries its history of ownership passed down from previous owners. Accordingly, the paperwork must be updated too. Note that when availing a used car loan, it is ideal to go for a vehicle that has not had more than two previous owners as it is nit preferred by lenders. Similarly, the vehicle should also not be more than 2 years old to get the best financing available.
Documents you must collect from previous vehicle owners before availing o a second hand car on EMI include the likes of Registration Certificate (RC) and insurance certificate, certifying coverage throughout the vehicle’s history. When examining the RC for the engine number and the chassis number, which must be physically examined and cross-matched for originality identification.
4. Initiate RC and insurance transfer
Once you have finalized the used car for purchase, it is prudent to initiate the transfer of the Registration Certificate as well as the insurance certificate to confirm ownership.
5. Go for car servicing
After finalizing the car and before purchasing, it is ideal to go for the vehicle’s servicing. Going for servicing beforehand allows assessment of any issues with the vehicle that can be addressed early on.
Top Features to Look for in a Used Car Loan
When deciding on a used car loan to avail for vehicle purchase, check out the following few features to look for to best decide on the financing option.
1. High loan-to-value ratio
Used car loans come with a high loan-to-value ratio today, allowing for maximum financing of the vehicle’s cost. It represents the maximum financing available as a percentage of the total cost of the vehicle while the remaining amount needs to be self-financed as a down payment. With the best lending institutions, the loan-to-value ratio for second-hand car loans can go up to 80-90% of the vehicle’s cost.
However, if you are capable of meeting a higher down payment, it is advisable to do so as this can help make the entire loan value affordable via low-interest accrual.
2. Financing of up to Rs.50 Lakh
Given that a high-financing value of up to Rs.50 Lakh is available for purchasing a second-hand car on EMI, a borrower gets the flexibility to choose the car make and model as per his/her choice and affordability. When deciding on the loan amount to avail, make sure to use a used car loan EMI calculator to better assess how much you can easily accommodate as EMIs and total loan liability within your income. Accordingly, you can proceed to apply for a suitable loan amount as a second-hand car loan.
3. Extended tenure for repayment
Along with a high financing value, these loans come with an extended tenure for repayment as well. Based on the lender selected, you can choose a repayment tenure of between 5 to 10 years as per your EMI suitability to start your repayments affordably.
4. Zero down payment financing
Some of the best lending institutions in the financial market also extend zero down payment financing as used car loans. Also known as 100% used car financing. These financing options allow the borrower to purchase their choice of used cars via complete external financing only without involving any self-financing. You may be asked to meet strict eligibility requirements when availing of the loan, which ensures the risk associated with complete financing is brought down to the lowest possible mark.
5. Low-cost funding
Second hand car loans involve low-cost funding as well with the best lenders, attracting competitive rates of interest. Other fees and charges attract nominal rates too, making the cost of these loans affordable.
With the simple online process involved in the used car loan application, one can easily apply for the necessary financing from the comfort of his/her home. Only make sure to arrange the necessary documents before applying so the process is completed smoothly, enabling quick financing.