Car Loans

What is the first question you asked yourself when it came to deciding on buying a car? Well, the first question a lot of people ask themselves is, “do I have to get a new car or a used one?” This is a very relevant question, don’t you think? For anyone thinking about buying a car, this is a given factor. But why does this confusion arise in the first place? This is because buying a used car is a much better choice. For starters, even though buying a new car seems very tempting, getting a used one is the smarter choice on the financial front. 

Why Is Buying a Used Car the Smarter Choice?

A used car is going to be just fine and work just as a new one. After all, everything your cars need to do is take you from point A to point B. But when you get a used car, you can enjoy the benefit of slower depreciation, cheaper registration, cheaper insurance coverage, a better value for your money, and most importantly, you would not need a lot of money.

For a new car, you will comparatively need a lot more money, the depreciation rate will be much faster, the registration and insurance will turn out to be more expensive, and ultimately you will be spending much more than you need to. 

The moment you drive your new car out of that showroom, it has already depreciated 20% from the price that you bought it for, and that would not be the case with a used car, would it?

The best part about this is that banks also offer you great deals on used car loans, some of the best car insurance policies in India, and several other easier ways of owning a used car much sooner than you estimate it to be. But, there are a few things that you might not want to overlook if you are buying a used car through a loan.

Factors you Need to Remember Before Getting a Used Car Loan

These are the five main attributes that you should never forget when you opt for a used car loan:

1) When Was the Last Time You had Checked Your Credit Score?

This is the very first thing you might want to keep in your mind before you opt for a used car loan. Firstly, if your credit score is low, then there is a very big chance you wouldn’t even get the loan. When you know your credit score is slow, you might want to give it some time and wait; this is a better option than going through the trouble of everything and then finally being disappointed.

Secondly, there are also chances that you might get a used car loan for a lower credit score. But there is a drawback to that. The lower your credit score is – the higher the financial institution or the lender of the loan is going to charge you with interest. Which is a big bummer during repayments.

2) Have You Checked Up on the Lenders?

You can never settle for less. There is always one option that is better than the others. For instance, if Ram is getting a used car loan from X Bank and he can afford to pay off his car loan within a particular period and at a certain rate. Raj also chooses the same bank out of familiarity but can’t afford those rates, and more, he needs to do more research in order to find out if this is the cheapest that he gets.

You need to understand – when it comes to lenders. Different lenders have different things to offer you, and it ends up to you to choose the ones that suit you the most among them. 

3) Have you Chosen the Car Yet?

Make all decisions right now, which also includes choosing the car you want to buy. Today, the used car market has expanded much more than you imagine. People have also come to understand the valuation of buying and selling cars in the environment. Since so many people are buying used cars, it has become a crucial element for more platforms and services to develop quicker.

You can use these platforms and services to your benefit. Since it’s a used car, you would have to be choosing a reliable seller since going back to the seller of a used car is not the same as going back to the seller of a car dealership or company for the new ones. 

4) Are your Documents in Line?

This might sound too basic since you already know that you are getting a car loan and you need to have the documents, but it is not the same as you see. Having just your documents in line doesn’t always been taking them along with you. It means you would have to have them updated, linked, and more. These documents can get you through a car loan much quicker than you expect it to be (but only if they are right.) This could also save you a lot of time and get you to buy your car much more easily.

5) Make Sure You Haven’t Forgotten the Interest Rates

This is one of the most crucial factors of them all; just because it comes last, it does not mean it is the least important. Different lenders will give you different rates, and the lower the interest rates on the loans are, the better it will be for you to repay them. But you will not be facing a lot of loss.

Conclusion

Buying a second-hand or used car is a smarter choice for your finances, and it’s a great way to save money. But, if you are taking a loan, just because it is less money, it would not mean you can overlook the above-mentioned factors. Once you’ve ticked all these boxes on taking out a loan for a used car, let’s just say you are ready to go forward.

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