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Getting a car is still considered to be a life-changing event in India. For the middle-class families, it is nothing less than a license that shows their upward mobility. Since the entire occasion of buying the first car is filled with some amount of tension and some amount of excitement – it can prove to be a breeding ground for errors that can cause a good amount of damage.

Hence, if your focus is to buy a well-maintained used car at a good price and get a loan for it, here are a few things you should keep in mind before you proceed with the transaction:

Buy the car only from an organized or branded reseller.

One can never stress enough on this theme – focus on buying the car only from an organized or branded reseller. Several brands have come up with their own distribution networks for pre-owned cars. If you are interested in buying a used car, you should focus only on visiting organized or branded resellers.

Some car buyers believe that since second-hand cars market must be smaller than new car buying market, they will have more possibilities to negotiate at a smaller, unorganized reselling store. The reality is quite different than this – second-hand car buying market is usually 2-3 times bigger than the new car buying market. Hence, the organized players in the industry know the process of buying a used car better than their unorganized competitors.

Besides this, most financial institutions who lend money for used cars clearly state in their policies that they will entertain loan applications made only for cars that are bought from branded or organized resellers. Whether it is about the authenticity of the documents or warranties attached to the vehicle, buying it from an organized reseller will only help you in the long run.

Focus more on the condition of the car, than on the price.

If the car is in great condition, getting a loan on it will be easier and less expensive to you. At the same time, if the car is really old and is available at a steep discount, the loan would be more expensive for you. Hence, don’t get lured by the price-tag on the car. Instead of that, focus on the cost of ownership that would later include maintenance costs as well as the repayment you have to make on the used car loan.

Get the documents in line – before you agree to buy the car.

If you are buying the car from an organized reseller, there are high chances that you will get all the documents in place. That said, it is your duty to get the documents and verify that everything you need is available. Sometimes, the banks may get the documents directly from the reseller. Even in these cases, you should ask to stay in the loop of the document transfer so that you can at least retain a copy of these documents. Generally, the document would include an RC proof, invoice when the car was bought, service maintenance receipts, receipts of any major parts that were replaced and past criminal record associated with the vehicle, if any.

Conduct your due diligence on the car, the loan and the seller.

Buying a used car can seem to be an intimidating experience for the first-time car buyer. However, you can streamline this process with some logical discipline. Here is how you should focus on the due diligence:

The Car: The car should have proof of legitimate ownership and servicing history. Once you are satisfied with the legal standing of the car, you can focus on the quality. Pay special attention to the car’s mileage and handling. If you think it’s necessary, take a mechanic with you to verify each part and then take the car for a test drive before you agree on buying it.

The Loan: Before everything else – ask your lender to give you the eligibility criteria for a used car loan. These eligibility criteria will usually include the type of cars they lend for and the income bracket one should inhabit. Once that is done, understand the interest and the down-payment that the loan supports. You should ask the loan provider in detail about the amortization scheme, or what amount of principal repayment will be included in each instalment.

The Seller: Finally, before buying the car, conduct some research on the seller. Even if it’s an organized reseller, you should be satisfied with the service you can expect from them. The best way to proceed with this would be by reaching out to used car owners that have bought from reseller.

Understand economics before you buy the car.

The term ‘economics’ can sometimes intimidate some people. There is nothing to worry about. The usual metrics you should focus on are the policy changes that may impact the second-hand car market, the probable resale value you may get on the used car and the maintenance cost you will incur on it.

For instance – BS-VI norms will make it very difficult to sell a diesel car in India that does not comply with the prescribed engine specs; resale value of some brands is better than other brands; so on and so forth.

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