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Most people turn to a finance option if they do not have outright cash required to purchase a pre-owned car. There are numerous factors that have to be considered while availing of vehicle loans. The most important step in the loan application process is choosing a lender. While selecting a lender, you must consider the following six factors:
1. Reputation of the lender
Always opt for a reputable and well-established lending institution. Such institutions are well-versed with the latest trends and schemes. They understand their customers’ needs and provide services to suit those needs. You should therefore check on a lending institution’s reputation and its professional lending experience.
2. Amount of loan offered
Not all lending institutions provide the entire sum that borrowers apply for. In case of used car loans, the borrower has to provide a certain percentage as down payment. This amount varies from lender to lender. Hence, it is important to select those lenders who approve a higher loan amount so that your down payment may be lower.
3. Interest rates
Usually, the interest rates for second-hand auto loans are slightly higher than that of new car finance. However, there are many banks and lending institutions that offer loans at attractive rates in order to draw more customers and increase their customer base. Take advantage of this benefit, and choose a lender who offers lower rates of interest. Low interest rates mean that you have to pay less for your car loan.
4. Borrowing costs
It is imperative to read the Terms and Conditions of repayment before signing on dotted line. Check for pre-payment charges, part-payment fee, processing fee, late payment charges, and loan cancellation charges, besides others. You need to have thorough knowledge about such fees and charges.
5. Repayment options
Used car loan seekers now have the option of customizing their EMIs based on their financial capabilities. Hence, choose lenders who offer such kind of flexible repayment options as it helps you adjust your repayment amount in case you have a surge in income or are cash-strapped.
6. Loan processing time
Some banks and financial institutions take a few days to approve used vehicle loans, while some take a couple of weeks. Based on your requirement of the loan, you may choose the right lender. If you wish to obtain a loan on an urgent basis, opt for a lender who offers faster processing time. Some lending institutions may also provide customers with the option of checking their approval status online thereby providing convenience to customers.
Finalizing on a particular lender may be a confusing task due to the array of options available in the market. Consider all the above-mentioned factors before you select your used car loan lender as it will help you avail of a pre-owned car loan conveniently.