Getting a used car makes sense for many of us as the price is significantly lower and good quality can be assured if you buy it from a reputed used car showroom. As you venture out to buy the right car for your family, getting finance for the same can be easy too with readily available used car loans. While you prepare to apply for a used car loan, following these tips may come in handy to make sure your application doesn’t get rejected.
Tips For Easy Car Loan Approval
- Buy the used car from a reputed dealer for correct valuations
Choosing a second-hand car requires a lot of attention to detail as well as professional guidance. It is always better to visit a reputed car dealer with a good track record to get a car with good quality valued genuinely. As you apply for the used car loan, the value of the car determines your loan amount, and having the car purchased from a reputed dealer makes the valuation process faster and well accepted by most banking institutions.
- Maintain a good credit score
Your credit score relays your ability and willingness to repay a loan. It is the first thing lenders evaluate before approving the loan application. Always pay your installments on time. Your past loan repayment history determines your worthiness as a borrower in the eyes of the lender.
- Compare lenders
Used car loans are offered by a number of lenders. Each has its own set of eligibility criteria, interest rates, tenures, and other charges. Do your research thoroughly to compare the lenders. Make comparisons on the basis of LTV (Loan to Value) ratio, the interest rate charged, other charges like loan processing fees, and any other ongoing offer that may suit you.
- Check eligibility criteria and apply online
Most financial institutions list the eligibility conditions for loans like employment conditions, job stability, minimum age, etc. on their websites. Before applying for the loan, it is better to check those requirements, then apply where you meet all the conditions. Loan applications are accepted online by most lenders nowadays, so it is better to apply for the loan online from the safety and comfort of your home.
- Keep the documents ready
Applying for the loan requires a number of documents that need to submitted, like ID proof, address proof, income track record, IT returns, salary slips, etc. Make sure to arrange the documents required from the checklist available on your lender’s website. If you have documents ready, it will make the loan application process smoother and quicker.
- Better go with lenders with whom you already have a relationship
While applying for the loan, you may have to negotiate the terms and conditions in terms of interest rates, loan prepayment charges if any, processing fees and other fees charged, etc. It is best to go with the financial institution with which you already have a relationship in terms of a saving account or FD or other investments or loans, so that chances of your loan approval are higher and terms of negotiation are more favorable.
- Choose loan tenure wisely
As you go ahead with your choice of lender, make sure you choose the loan tenure smartly based on your repayment capacity. Generally, higher the loan tenure, lower is the EMI, but higher is the overall interest paid. Make sure your EMI fits well within your budget so that you are able to maintain your credit score going further.
As you take the time to choose the used car that suits your needs, similarly, invest a little time and effort to find the right lender. Following the above-mentioned tips can make the loan application approval process smooth, and you will be able to take the used car home in no time.