5 Mistakes To Avoid While Applying for a Used Car Loan

Last Modified: 31-March-2022

Used Car Loan

A used car is the best money-saving solution when looking to bring home your first four-wheeler. However, buying a car, new or used, is a massive decision, and hence a lot of thought goes into it. It requires planning and research to understand the pros and cons of going for a particular car. In the same way, financing that car also needs the same amount of planning. At the same time, multiple lucrative schemes might tempt you to rush in to grab the offer. It is necessary to consider the potential pitfalls before opting for a car loan. Let us get to know what they are.

Mistakes You Should Avoid While Applying for a Second Hand Car Loan

Rushing into applying for car loans can result in mistakes, leading to loan rejection or a rise in interest rates. Here are a few common mistakes that people make when applying for a used car loan for you to avoid.

  • Overborrowing
    Most borrowers make the severe mistake of borrowing more than their budget. When you borrow more money than you can afford due to poor planning of repayments, it might end up stressing your finances, leading to defaulting on the loan. Calculating the estimated EMI in advance using a car loan EMI calculator will help you understand the loan affordability, eliminating future complications. Deciding upon the affordable EMI within your budget will help you do this.
  • Choosing a Longer-term
    When applying for a used car loan, always choose a shorter term that you are comfortable paying. Choosing a longer term for a car loan usually brings a high-interest rate and longer commitment time. The only benefit of a longer tenure is reduced EMI payments making it more affordable. Yet, a longer-term accrues more interest, increasing the total cost of the loan.
    Calculating your optimum tenure using the Muthoot second-hand car loan EMI calculator will help you arrive at a good term that suits your budget while not overshooting the affordability.
  • Shopping Without Pre-Approval
    Check if you can get a pre-approved loan from your lender. Pre-approved loans are cheaper than getting usual loans. Additionally, it allows you to get an idea of what fencing is offered to you at what interest rates, etc. this will help you confidently plan and buy the car quickly without worrying about the sanction delays.
  • Not Reading the Terms and Conditions
    Car loan interest rates, processing fees, penalties, prepayment fees, etc., vary from lender to lender. Not all lenders offer a transparent process like Muthoot Capital; hence, understanding the terms and conditions provided in-depth will help you determine if the loan offered is beneficial to you.
  • Not Making a Down Payment
    While Muthoot Capital offers up to 95% of the car’s value as a loan, it’s a good idea to make a large down payment to reduce the loan’s burden. Making a significant down payment will allow you to choose a shorter tenure, which will reduce your interest rate, and get a reduced monthly EMI amount to fit into your budget.

Also, Read- Tips to Make the Used-car Loan Application Process Easy

Conclusion

Bearing cautious about the above factors will help you save yourself from costly mistakes. Finding the right financing option will help you get the best-used car loan in the market. With Muthoot Capital, you can be assured that you are getting the true value for your money. We offer the lowest interest rates in the market, starting from 0.99%. You can also avail of the 100%* used car loan finance for specific models under specific schemes and repay it in a flexible term from 12 to 60 months without any hassle.

Are you ready to get a used car loan? Check our simple eligibility criteria, calculate your EMI and fill up the application form. We will contact you with the best second-hand car loan schemes for your requirement.

About Author
Muthoot Capital Services Limited is one of India's most progressive financial companies. It is the part of Muthoot Pappachan Group which carries a legacy & trust of more than 133 years.

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