In India, the market for previously owned goods is expanding quickly. The demand for used or pre-owned cars is rising as a result of the rising cost of new cars and the skyrocketing price of fuel. Comparatively speaking, a used car is less expensive than a new one. Many consumers want to finance the purchase of a second-hand vehicle.
However, if you have a tight budget, it could be difficult to purchase second-hand cars. Used car loans are available from numerous banks and NBFCs. To prevent traps, you can think about the following before processing any loan applications:
Not Planning Your Budget
The choice to purchase your ideal car is an exciting one because owning a car is an emotional decision. You should first determine your budget and how much you can spend before owning or preparing to purchase a car. You may get carried away in the salesperson’s conversation and get a car that costs more than you intended. Although the excess amount might seem small, it can result in additional EMI costs for you and longer tenure for your used car loan.
Not Comparing Car Loans
Previously, there were no possibilities for financing old cars. But now, circumstances have shifted. Banks and NBFCs have a variety of deals available. You have multiple options for comparing used car loan interest rates over the internet. Before moving forward with your loan application, it is wise to first evaluate the interest rates and terms and conditions of various lenders.
Adding Extra Accessories to Your Loan
You can be given the option by lenders to upgrade your vehicle with additional extras. This is a trick to extract money from you in addition to what is required. Ultimately, the additional sum will be added to the loan balance, increasing your overall loan payment and EMI. Devoid of such schemes, therefore.
Choosing the Wrong Tenure
You should first determine how much you can afford to pay for your EMI before applying for any loans. You should consult the EMI calculator for further information on this. Depending on the type of loan, loan terms might range from 1 to 7 years.
The greatest choice is the shorter tenure because you will pay off your loan faster. Even though it will result in higher EMIs, it will be to your advantage. Smaller EMIs would result from a longer term, but you would end up paying more interest. Therefore, be careful when selecting your EMI tenure.
Not Reading Fine print
One should be more familiar with the terms and conditions before taking out a car loan. To prevent any shocks, it is among the most crucial things to consider before taking out a loan. See to it that you read and comprehend all of the terms and conditions. Make a note of your uncertainty and ask your lender to reassure you.
You shouldn’t feel burdened by taking out a car loan, and it shouldn’t deplete your savings. So, it seems sensible to weigh the advantages and disadvantages.
Apart from the above-mentioned points, one should also keep track of the credit score. A good credit history will help you in getting a loan at a lower interest rate. However, if you do not maintain your credit score, you will be getting a loan at a much higher interest rate.
As the market for a used cars is growing so are the loans offered. There are plenty of options available for you and banks are offering attractive used car loans with low-interest rates. Before applying for a used car loan, you must consider the above-mentioned points to avoid any issues in the future.
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