Business Finance

Here’s all you need to know about used car loan financing

The global pandemic has made us realize the importance of having our personal vehicle. Even after a year, it is not safe to use public transport and if you have to commute or step out of your home, you should avoid taking public transport at all costs. In such times, it makes more sense to invest in a car of your choice. The rising purchasing power has led to a rise in the number of cars we see on the road. It is no longer a luxury but has become a necessity today. Hence, if you are thinking about buying a used car, do not worry about the budget. You can simply apply for used car loan financing and drive home the car of your choice. The loan is available for all types and brands of cars in the industry and it will make the purchase easier and convenient. Here is everything you need to know about used car loan financing.

What is used car loan financing?

You can choose any used car of your choice and approach a lender for financing. This means you will only have to make a small amount of payment as a down payment and the balance will be your loan. You do not have to compromise on the model due to the cost. The loan is easily available across the country.

Eligibility criteria

You are eligible to apply for the loan if you are over the age of 21 and have a valid driving license. It is also important to have a consistent source of income for the loan.

Documentation requirement

You will have to provide the below mentioned documents for the loan:

  • Identity proof,
  • Address proof,
  • Income proof,
  • Proof of down payment,
  • Invoice of the car,
  • Passport-sized photographs.

How does it work?

If you have decided to buy a used car, you simply need to head to the dealership first. This is where you will get the maximum options to choose from. You can take a look at all the available cars and shortlist them. The dealer might also recommend a financier for the loan but it is best to choose one on your own. You may not get the best deal when you work with the dealer’s financier. Once you shortlist the cars here, you can head to the pre-owned car market. Even if you have really liked the used car there, it does no harm to look at all the available options and then make a decision. 

The used car markets in your city will give you ample options to choose from. You can shortlist the cars available here and then take a test drive. It is advisable to always buy a vehicle after taking the test drive. This will give an idea about the condition of the car and you will be able to decide if the car is right for you. It is important to be extra cautious when buying a used car and you can only know about its condition if you take a test drive. 

You can also consider taking an auto enthusiast friend along with you so that you can judge the condition of the car. Keep in mind that the car is less than eight years in age. If it is older than eight years, you will not be eligible for used car loan financing and it will require a lot of maintenance. You do not want to bring home a car that requires maintenance as it can put a dent in your wallet. 

Once you shortlist on the car, you will have to choose a lender for the purpose of the loan. All lenders have a down payment requirement and you must adhere to the same in order to be eligible for the loan. You will have to make the minimum amount of down payment and the balance will be your loan. 

Loan application procedure

Compare the different lenders in the industry and the rate of interest offered by them. Choose a lender that offers the loan at friendly terms and has a flexible repayment tenure. You can then make an online loan application with them. You do not need to head to the physical office of the lender to complete your application, instead, you can simply fill the application form and upload the documents. The lender will verify the documents and approve your loan. You will have the funds in your account in no time.

Bring your car home and make the repayment while you use the car. Regular repayment of the dues will help build a strong credit score. Prepare a repayment schedule and ensure you stick to it. With used car loan financing, it is possible to own the car of your choice without stretching your budget or worrying about the funds to make the purchase. 

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