Nine things to keep in mind while taking a pre-owned car loan

Today owning a car is no more considered a luxury but a basic necessity. Especially in Covid times, when most of the people are avoiding public transport and are trying to maintain minimum exposure while traveling outside. But a new car is often an expensive affair, especially amid a pandemic. Buying a used car is a better option for a person who has an affordable budget. For which, a used car loan can help in affording the four-wheeler easily.

Here are nine things to keep in mind while taking a preowned car loan

1. Affordability: There are many options available for financing used cars. Many banks and other non-banking financial institutions offer facilities to avail of loans to buy preowned cars.

2. Vehicle: While choosing a second-hand car one should pick a vehicle with a high resale value, and from a good dealership. The used car should be between 1 to 3 years old. It should not have covered more than 30,000 km distance. One should also match the engine number with the chassis number.

3. Interest rate: Compare the interest rates charged by the banks to choose the most suitable option. One should also cross-check the used car loan interest rate mentioned in the pre-owned car loan agreement. It should also state the nature of the interest rate, whether fixed or floating.

4. Repayment options: When reviewing the loan agreement for a pre-owned car the repayment clause, including the flexibility and payment methods should be read carefully. This aspect can differ from lender to lender, and the agreement should mention it clearly.

5. Documentation: All important documents need to be checked and completed before the deal can go ahead. These documents include the insurance paper of the vehicle, any loan papers, registration certificate, etc.

6. Tenure mentioned: Check the details of the loan tenure as agreed upon by you and the lender.

7. Additional charges: Check for any additional costs on loans, for example, any add-ons for the car. One can also negotiate with the lender to reduce some charges.

8. Effective date: It is the date on which the first disbursement of the loan is made. All interest computation commences from this date. In case the money is not utilized within 60 days of the effective date then the loan may get cancelled.

9. Place of purchase/dealer: A person can buy a car from an unorganised market. However, one needs to be very careful of the dealers before buying to ensure it is a credible purchase. Organised markets are also a good option, from where a person can buy a second-hand car. Though there will be an additional cost charged on cars sold in such markets.