The automobile market in India is getting friendlier for buyers. There are greater financing options available. The wide range of possible tech up-gradations in cars has gone up. But above and beyond all of this, the used car market has organized itself and has become buyer friendly.
It has become relatively easier for used car buyers to find a good car from an organized or branded used car dealership. Some brands have joined the bandwagon to help buyers get used cars from their very own authorized used car dealers.
Now that the searching part for used car dealerships has been structured, you should focus on getting the right loan to buy your used car. Used car loans will make a lot of sense for people and families who are buying their very first car. Not only can you go beyond the budget you would have had if you were paying with cash, but you can also attract tax deductions. So, when you are starting with getting a used car loan, make sure you don’t make these mistakes and you’ll be good to go.
There is a nuanced balance that you have to maintain when you are trying to buy a used car on loan. If the car is old and very used, it would obviously be priced less. At the same time, the interest you will have to pay for the car loan will be much higher. This is because the more used a car is, the greater the interest a creditor will charge while releasing the loan to you. If a car is 7-8 years old, you might not even get a used car loan on it; even if you get it, the loan would be very expensive for you.
So, the mindset you have to go ahead with is – buy a car that is in good condition and is available at a good price. But don’t get focused only on the price because that way you might get a cheap car, but you will end up with a more expensive car loan.
It’s true that if you are a shrewd negotiator, you might get a better deal on a car if you buy it from an unorganized seller. It is also true that you personally know the unorganized seller, you may get a great deal. But the probability of both these factors coming together is very less.
Now, if you are buying the car from an unorganized seller, you will not qualify for a used car loan. This is because most of the financial institutions that lend capital for used cars don’t want to deal with unorganized dealers. Why? Because they will have to bear extra cost for conducting due diligence on the background of the seller. At the same time, it is difficult to get authentic invoices if you are buying from an unorganized dealer. Hence, no matter how sweet the deal looks, don’t buy the car from an unorganized seller.
Many buyers who are buying a car for the first time don’t understand the importance of an RC book. Here is the tricky part – if you don’t follow the advice given in the second point, you might find a good car in a great condition available practically for peanuts. Why? The car salesman would say that one small document is missing. This missing document would be RC. If you don’t understand the importance of the RC, you might end up buying a car.
RC shows the legitimate ownership of the car. If the seller does not have an RC with her, what guarantees that the car is not stolen? Hence, consider only the car that has an RC available at the time of the sale. RC book is one of the most important documents you have to think about. Other documents you should ask for, when considering a used car, are service maintenance receipts, invoices from the previous purchase, and authentication certificates on replaced parts and so on. The best way to proceed with the transaction, would be to ask your prospective financier on what documents will they require in order to verify the used car’s eligibility for a loan.
Don’t get fixated on the price and focus on the right documentation. You can take care of all of these possible mistakes by buying the car from an organized re-seller or a branded used car selling service provider.