It is not that difficult to find the best Used Car Loan Financing interest rates and deals. However, many borrowers make a plethora of mistakes and undermine the process of finding the best suited EMI plan from the lender (banks and NBFCs).
These are the things to avoid:
● Comparing only offline or only online interest rate quotes from lenders:
While there are several helpful online tools from lenders that help calculate EMIs or compare interest rates, these platforms may also carry hidden online transactions or application fees. These hidden charges may be less (if present at all) in the offline application process.
However, the convenience of application and approval is not the only thing that these online platforms provide. These platforms also cut out the “middle-men” like bank representatives, bank consultants, etc., and save time instead of going through additional personnel for loan approval.
While on the other hand, bank representatives may get the borrower custom offers under several schemes and loyalty programs.
● Stretching the loan tenure:
Many borrowers make the mistake of keeping the loan tenure long for lower EMIs while glossing over the fact that the car will depreciate down the line while the loan is still being paid on the original loan amount.
The only time stretching the loan tenure is acceptable when the borrower might get a tax incentive under a government scheme.
● Believing that individual brokers can offer the best deals:
Brokers with localized connections to banks and NBFCs may provide a better value Used Car Loan Financing in some cases. However, nowadays many online platforms can offer similar value with local banks signing up on these platforms themselves to give the best quotes. This also removes the brokerage fees from the equation.
● NBFCs do not match the bank’s interest rates offers – Myth:
The common misconception amongst the borrowers is that the NBFCs are inferior to banks and that they will provide less favorable interest rates.
But according to statistics, 80% of these loans are sanctioned by NBFCs.
Furthermore, they provide better interest rates as well as have a higher approval rate than banks.
The other myth concerning NBFCs is that they are solely focused on loan services, but they have also added used car servicing as well as insurance add-ons to their loans.
What to know about Used Car Loan Financing:
● There can be up to 85% financing of the used/pre-owned car. This would depend on the condition, location, car type, age, emission norms as well as the car’s ownership document. Whether the car is purchased from an authorized dealer will affect the percentage of the loan amount. (This is because an authorized car dealership will have official quality checks even on pre-owned or used cars).
● The loan’s financing percentage will also depend on the brand value of the car, or whether it had any prior accidents or any flood damage, pollution test fails as well as if the vehicle was discontinued by the maker, etc.
● The borrower’s eligibility test consists of the default things like identification documentation, proof of address, proof of income, and a minimum age of 21.
Check website for more loan and finance products