India has never seen such high demand for used cars before. As Indian manufacturers are nurturing an organized market for used car sales, consumers are becoming increasingly aware of the numerous advantages of buying a used car. If you are planning to buy a used car with the financial support from a lending institution, then you would be interested in knowing how to avail a loan at the most competitive interest rate. Here’s our 5-step guide to securing a used car loan at the best interest rate:
- Do Your Research
Nothing can replace a thorough research. If you are planning to apply for a used car loan, then you may have already done some research on the best lending institutions, documents needed, used car finance rates etc. To avail a competitive rate of interest on a used car loan just researching about the make and model you want to purchase will not be enough. First, know more about the various lenders in the market who specialize in rendering used car loans. Make a list of at least four to five such lenders before contacting them. Remember to ask about the most popular used car models they finance.
- Check with Multiple Lenders
Start with the most popular lender on your list. Seek information about their process, tenure of loans, interest rates, make and models they finance, and most importantly, their glossary of terms and conditions to finance used vehicles. Equipping yourself with this information will assist you in making an informed decision regarding the lender and will also give you an upper hand in the negotiations.
- Popular Make and Model
It is widely believed that only popular make and models of used cars are readily financed by lenders. Therefore, if you want to secure a competitive rate of interest on your used car loan, it is advisable that you opt for a popular model from a recognized manufacturer. Doing that has two advantages; first, since the model is popular, it will be readily available in the market, and second, more lenders will be ready to finance the purchase, thus giving you more options in terms of choosing the lender. Visiting brand showrooms could be a good start. Most popular original equipment manufacturers (OEMs)have their own used car showrooms. There you can not only find the best quality used cars but also avail other advantages such as readily available loans, on-road assistance and more.
- Check the Condition of Your Vehicle
After short listing the used car model you like, evaluate the condition of the vehicle. It is important since lenders in India take into account many factors before approving a loan. A decent yardstick for personal assessment includes: the vehicle should not have traveled more than 50,000 kilometers, should be preferably sold by the first owner, must not have been in any major accidents or undergone many repairs, should have been serviced regularly, and most importantly, must not have any pending dues on it. Remember, more information you have at your disposal, the better are your chances of securing a good used car finance rate from the lender.
- Negotiate with the Lender
In the last and final step of the process, sit down and negotiate the terms and conditions of the loan with the lender. Many first-time borrowers are usually not aware of the fact that every lender has a predefined margin on their loans until which they can negotiate. Negotiations can be done across almost all aspects of the loan including increasing the tenure of the loan to making a lesser down payment. However, the end goal should always be to secure a better interest rate than offered.
Financing the purchase of a used car in India comes with a wide range of benefits such as it being lighter on the pocket to getting a better worth for the price you pay. Now that you know how to secure a low used car finance rate, you may go ahead and secure the best deal to finance your used car purchase.