People buy four-wheelers for various reasons. It can be a status symbol for some or just a realisation of buying their dream car. For some, it may be because of pure need. In this era of fast-moving life, a car has almost stopped being a luxury but a necessity. The car industry is a fast-growing sector and due to the need for private transport, the market for second-hand cars or used cars is also rife. It doesn’t matter if the car is used, it nevertheless is a significant investment and many take used car loans for the purpose.

You must have an idea of the kind of car you want, the features or even better if you have already decided the model and feature specifications of the car you want to buy. Now it’s time to look for used car loan providers. The internet will give you many options, go through them and zero in on the arrangement most suitable option for you. Before you apply,

Here are 4 things you must know and consider:

1. Rate of interest
Value estimation of a used car can be quite a tough process. A new car has a clear price tag but for a used car, a number of factors have to be considered such as the type of usage the car went through, number of years and distance travelled, repairs done on the car and the like. For both the buyer and the lender, it is a risky process so the interest rates for a used car tends to be a little higher than used cars. Do a little research about interest rates before you apply. You can use online loan calculators to have a concrete idea about the EMI payments later on.

2. Loan tenure
The loan tenure depends on the quality of the car being financed. As already mentioned, valuation of a car for financing it is in itself a tricky process and so is determining a loan tenure. Banks and lenders, however, generally limit the loan tenure on used car loans. You might want to pay off the loan debt as soon as possible to get rid of the overall loan interest burden.

3. Role of credit score
There’s a risk in lending for used cars, thus lenders compensate the risk by charging higher interest and backing it by an asset. Credit scores as such do not play a deciding role for used car loan applicants but having a good credit score increases chances of getting a better deal for interest rates and EMI payments.

4. Repayment arrangement
This should be considered wisely. Dealing with a reputed Non-banking Financial Company will assure you that your EMI payments are flexible and can be easily managed.

Conclusion
Keep in the mind the above points while applying for a used car loan. Remember that your credit reputation matters so borrow responsibly and only what you can pay back in time. It doesn’t matter if the car is used, repayment will be recorded all the same.