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If you have just received your driving license, considering a used car to hone your skills is a good choice. This will not only help you improve your driving skills but is also a more affordable option when considering the purchase of your first car.
Unlike the past, purchasing a second-hand vehicle is not difficult even if you do not have the full amount to make the payment. Most financial institutions and banks provide loans for the purchase of used cars. However, before you apply for these kinds of loans, you need to understand the terms and conditions and the precautions to be taken while acquiring the debt.
Definition of used car loans
These loan facilities are available through authorized lenders to enable users to buy used cars. Generally, used car loans are sanctioned up to 75% of the value of the vehicle. Some institutions may also provide up to 90% of the amount as loans.
Procuring the loan
While contemplating the acquisition of second-hand cars, it is important to consider some important factors. You must consider the basic needs and types of loans available. The following steps must be followed to procure the loan facility to buy the used car.
- Choosing the make of the vehicle: Lenders do not finance all kinds of cars and choosing vehicles that are eligible for funding is important. In addition to the type, institutions will finance vehicles that are of a certain age only. Discontinued models or cars that are older than 5 years cannot be funded through institutions and choosing a car that is newer is advisable.
- Calculate the amount of the vehicle: Once you have identified the car, you will have to calculate the total amount you will have to incur towards the purchase. You must make the necessary arrangement for the lump sum as an upfront advance prior to the purchase. This will also be useful in determining the amount you will need to take on as used car loans.
- Determine your requirement: After calculating the loan amount, you will have to determine the tenure and the monthly installment you will be able to afford. Considering your current and future expenses before applying for the loan is crucial to avoid financial difficulties at a later stage.
- Search for the available options: There are several banks and non-banking financial institutions that provide loans for second-hand cars. Take some time in researching the various options and procure quotes from at least three lenders. This will help you make an intelligent comparison and find the most competitive loan for purchasing the used car.
- Submit documents post verification: The lenders require borrowers to submit proofs of their incomes and attested and authorized copies of the car purchase. In addition, the institutions require other documents and getting a checklist of the documentation for faster procession of the loan. Once the documents are received and processed, the approvals take between 7 and 8 days. The lender will then disburse the money directly in favor of the vendor.
Know more about used car loans and their interest rates at http://www.mahindrafinance.com/used-vehicle-loans.aspx.
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