to the vehicle model you want to buy. Lenders are hesitant to approve loans for vehicles that are either too old or have been discontinued by the manufacturer. The reason is older vehicles have quite a poor resale value. In the event of default, they won't be able to recoup their unpaid EMIs. If your question is how old a car should I buy in India, then the piece of advice here is to buy one that is no more than three or five years old.
Increase down payment
Raising the down payment reduces the lender's involvement in your used car loan. This loan is typically available for a maximum LTV of 90% or a maximum amount of Rs 50 lakhs. However, if you can contribute 50-60% of the car's value out of your own pocket, your chances of obtaining a low-interest loan increase.
Improve your creditworthiness
The credit report is a vital document that plays a crucial role in determining your loan interest rate. In case you have a habit of paying your past and current debt EMIs on time, your chances of obtaining an affordable loan increase.
Your funding will be denied if your credit report shows multiple hard inquiries, missed EMIs, or cases of loan settlement. In addition, there are times when your lender fails to submit your loan closure report due to negligence. In such a case, contact the lender's executive immediately and request that your loan closure report be sent to the appropriate credit bureau.
Check Documents
Car theft has become all too common in India. When purchasing an old car, pay close attention to the various car-related documents. The registration certificate (RC) will identify the legal owner of the vehicle. Request the seller to provide a road tax receipt. Unpaid road taxes will incur a hefty penalty. Examine the insurance and service record book to learn how the previous owner maintained the vehicle. If any of the key documents are missing, you should reconsider purchasing that car because it will either result in loan rejection or a costly second-hand car loan.
ALSO READ: Guide to Financing Your NEW Used Car! Conclusion
Getting a second-hand car is a smart idea in today’s date as many car enthusiasts upgrade their car despite being in top condition. Furthermore, if you choose to buy from a second-hand car dealer then the car condition could be as good as a new one. Now that you know of all the top reasons as to why you should get a used car loan, go ahead and choose a lender and financing option that suits your needs best.
Disclaimer: This post was first published on 18th December 2020 and has been updated for the latest information, freshness, and accuracy.