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6 tips for getting an affordable loan on a used car

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With the reopening of offices and institutions around the world and people resuming their old routine of commuting to work and elsewhere, the need for personal transportation is greater than ever. But as you may already know, buying a new vehicle may not be a smart financial decision right now, due to uncertainties in the job market and the need to save more. for health care. In addition, new vehicles suffer immense depreciation in the first year itself.

On the other hand, getting a used vehicle will not only be much lighter on your pocket, but will also save you additional time and effort in terms of maintenance. Along with this, in India you can get a loan on a used car in no time.

So, in this article, we will share with you 6 tips to follow if you want to get an affordable loan to buy a used car.

  1. Know your credit score

One of the first things you need to consider when applying for a used car loan is your credit score. Your credit score is basically a numerical value assigned to you by credit rating agencies after reviewing your financial history. Most credit rating agencies in India take four main factors into consideration when determining your score. They are:

  • The total amount of credit you have used in the past
  • The total amount of loans you have taken out in the past
  • The total number of one-off refunds you’ve made
  • The total number of payments you missed

Considering all of these factors, you are assigned a score on a certain scale, and the higher your score, the easier it will be to get approval from the lender.

  1. Request quotes from lenders

Once you are aware of your credit score, the next step is to start approaching lenders for quotes. Nowadays, most financial institutions provide used car loans and hence you just need to contact them online through their website or visit their branch.

Most lenders have a readily available portfolio of the standard loan amounts they offer, depending on the make and model of your used car, so this step should be fairly straightforward. However, make sure that you are not only looking at the loan amount offered, but also the interest rate, tenure, down payment requirement and more.

Along with this, one of the most important things to remember when applying for a loan for a used car is not to share your credit score information with multiple lenders as multiple inquiries can be handled. as negative behavior and can lower your Goal.

  1. Negotiate with the lender

Once you have finalized a lender based on your assessment, it will be time to share your credit score details and begin the negotiation process. Most first-time borrowers don’t know this, but all lenders have a certain percentage mark-up on their loan offers, which they are willing to negotiate on. This can either be through an increase in the loan amount, a decrease in the interest rate or a longer term.

However, in order to make sure that the negotiation goes in your favor, you must have a good credit history, so that the lender sees your offer as a potential asset and not as a deficit liability.

Along with that, a trick that you can use to turn the negotiation in your favor is to increase your down payment amount, as this will essentially indicate that you have the required repayment capacity and that you will most likely not default on your deposit obligations. payment.

  1. Keep the term short

Most first-time borrowers, especially when it comes to a used car loan, believe that the longer the tenure the better. However, this is not true.

If you want to make the most of the benefits of a used car loan, you should always strive to keep your tenure as short as possible. There are two important reasons for this; First of all, when you have a short loan term, the interest rate charged will be lower and thus, you won’t burn a hole in your pocket. Secondly, lenders usually offer very competitive interest rates as well as higher loan amount for short term loans as they can generate quick profits.

  1. Pay the other fees by yourself

One of the most common mistakes first-time borrowers make is claiming the full amount of their used vehicle expenses as the loan amount. However, if you want to ensure that your application is approved sooner, you should only claim the actual cost of the used car as the loan amount and pay the rest of the expenses in cash.

There are two reasons for this. Firstly, it will drastically reduce the total loan amount you applied for and thus save you money in the long run in terms of cheaper interest rates and shorter tenure terms. Second, you can negotiate better with the dealer and get a cheaper deal when you pay some of it in cash.

  1. Apply for a secured loan

Last but not least, as with all other loan instruments available in India, a used car loan is also available in secured and unsecured forms. If you want to increase your chances of getting your application approved, one of the best methods is to apply for a secured loan.

In this case, you will need to pledge an asset or collateral of equal or greater value as security for the loan, and in most cases your application will be approved without issue.

Conclusion

Getting a used car in 2021 can save you several hours in terms of commuting and other places. In addition, you will be able to avoid public transport and stay safe against the coronavirus. And it won’t cost you a bomb. So go ahead, apply for a used car loan today and get the convenience you deserve.


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