Over the last couple of years, the second-hand car market has grown significantly compared to the new car market. In the past year, around 4 million second-hand cars were bought and sold compared to the sales of 3.8 million new cars. The major reason being the affordability and also the ease of getting loans now. Almost all the major banks and loan services provide Used Car Loan Interest Rate ranging from 8.90% to 17.00%.
Here are a few things you must be clear of before thinking of getting a car loan for a pre-owned car:
Knowing Your Credit Score
Before approving a loan, lenders evaluate the borrower’s credit history. Maintaining a healthy CIBIL score is important for getting loans sanctioned easily. Any individual having a bank account can check their CIBIL score on the official CIBIL website. It just asks for basic personal details and you can view your CIBIL score for free. The score ranges from 300 to 900, and anything above 700 or 750 is considered to be a healthy score. In case your credit score is poor, you can improve it by eliminating credit card balances, disputing inaccuracies, maintaining EMI deadlines etc.
Research Available Sources
While seeking a loan for buying a second-hand car, it is important to know the minute details of this process. Having thorough information on used car loan interest rates eases the decision making procedure. It is advisable to choose an offering best suited to your needs and repayment ability. Multiple platforms and websites are available for you to compare all the available options and simplify the search for you.
Have a flexible approach towards the tenure
In the current market, used car loan rates are commonly between 10% and 12% mark with a tenure of 5 years. Though there are options of tenures ranging from 3 years till up to 7 years as well. Yet, the final loan amounts differ from lender to lender as they have restrictions on the maximum loan amount, loan tenure, processing fees, and some other factors as well. Depending on your affordability and plans, choose the best EMI option that suits you. For instance, you may wish to avail of a maximum possible repayment tenure so that your EMIs are low. However, in such a case, your loan interest rate would be higher. Therefore you may wish to scrutinize the maximum EMI amount which you can afford and accordingly reduce your loan tenure. This could result in lower interest rates.
Approach lenders during festival season
Though there is no fixed particular time to buy a second-hand car, in India, the best deals come out between September and November. This is primarily because major festivities occur in India during this time and buyers plan their purchases accordingly. Approaching lenders at the festive period increases your chances of getting favourable deals on processing fees, pre-closure charges etc. Customers may also receive the best possible Used Car Loan Interest Rate
Take your time
Every individual likes to own a car, but never decide hastily. It is always better to consult someone in your network who has taken a second-hand car loan earlier or a financial advisor and take tips. Evaluate your existing financial situation. It is important to be aware of possible risks and decide accordingly.