Guide to Financing Your NEW Used Car!

Over the past few years, India's used car market has been growing at a rapid pace. The increase in quality of cars along with better road infrastructure makes cars last longer. The longer usable life, growing incomes and shorter ownership periods have led to a huge supply of high quality cars into India's used car market. In addition to these, there are several other benefits of buying a used or pre-owned car, such as:

1. Lower insurance premium

2. Lesser depreciation

3. Optional extended warranties (in certain cases)

4. Easy financing

Points to consider before purchasing a used or pre-owned car:

1. Define your budget

Whether you are going to buy directly or through finance, you must determine a budget beforehand. Heading out to buy a car without a proposed budget might lead to unwanted extra expenditure. Knowing what you can actually afford is the key to not spending much. Its best to search for cars that fall within your budget.

2. Identify your needs

You must know your main requirements from a car, such as power, efficiency, low running costs, seating capacity, body style, etc. Make sure that your primary usage guides your purchase decision. It would be a good idea to consider your current and future needs as well.

3. Choose your car

Once you know your needs you would be able to select the right car for yourself. You can either pick a car by visiting used car dealership and choosing a car in person or browse online and then decide on a model you like.

Given the amount of money involved, it is recommended that you make in-person visits, and take a few test drives and then decide the car.

4. Check your credit history

If you haven't checked your credit score you must make sure to go through it before putting in an application. A poor credit score, might result in a rejected loan application. Knowing your history will allow you to apply for an amount which you are eligible for and ensure that you are able to bring home the car of your dreams. A good credit history on the other hand, would ensure financing companies trying hard to get your business with minimal complication.

5. Check past history

A background check is critical, as it will reveal information pertaining to the cars ownership, service and accident related history. For this please check with the authorized service center, insurance company and the previous owner.

6. Validate ownership

Check whether the car you have chosen is from a genuine seller. Get photocopies of the original car documents, check for authenticity (from the relevant RTO) and ensure that you transfer ownership as soon as possible.

7. How much do you want to pay per month?

There are various EMI options given by NBFC's and banks but you must choose your EMI plan / loan tenure carefully. Do not select a plan that makes you pay installments that would disrupt your financial stability. Its advisable to pay slightly more but avoiding a cash crunch today.

8. Avoid buying a car on the first visit

Do not be hasty with your purchase. Take your time and consider all the options before landing on a final verdict. Take the car out on a test drive, you may even show it to a professional used car mechanic who could inspect the vehicle and give you an exact picture about the car.

9. Get internet quotes from several dealers

The Internet can help you a lot in finding the perfect insurance quotes. Research on various sites to get help in finalizing the best deal that suits your requirements.

Pay up front or finance your used car?

People usually prefer buying upfront if they have the money. But it is always advisable to finance your used car. It helps people to get their dream car without finishing all their savings.

1. Financing a car has its advantages like:

   1. Low upfront payment, making the payment structure more affordable.

   2. Helps in building your credit history and credit score

   3. You can own your car now and pay later.

2. There are also certain issues you might face like:

   1. An additional burden on your monthly expenditure

   2. Shorter payment tenure vs. new cars

   3. Slightly higher interest rate vs. new cars

Documentation and eligibility requirements

To be eligible for a financing by most Indian NBFCs and Banks, you must fulfill certain conditions such as:

1. You must be an Indian resident.

2. You must be above the age of 18.

3. You must have a stable job for two years with a minimum 6 months at your current job.

4. You should have a steady business of your own for one year.

5. Documents required:

1. Identity proof

2. Address proof

3. Income proof

4. Two photographs

Getting a used car for personal use, is a great idea to save big and enjoy a bigger car. Just remember to follow the suggestions mentioned above and look for a high quality used car, preferably a car which is still within its original warranty.

If you are planning to buy a second hand car, and are thinking financing your used car, then please visit us at www.HeroFinCorp.com/used-car-loans

To know more about Used Car Loans, read some of our earlier blogs linked below:

• Advantages of buying a pre-owned car

• Points to remember before taking a used car loan

• Financing your new used car