A two-wheeler might be comfortable for the younger lot in the country who like to travel affordably and without getting caught in traffic. However, nothing beats a car when it comes to safety, family travel and luxury. Needless to say that a four-wheeler might not be everyone’s cup of tea as it is a high priced commodity, but a pre-owned/used car can tick all the boxes when it comes to owning a car. Multiple vendors specialize in used car sales, and quite excitingly, they also provide financing options for the same. Assuming that you have found the perfect car for you and your family, the next step should be looking for a financial partner who can provide your car loan with the minimum down payment.
Ways to get used car loan with a minimum down payment
Step 1: Choosing the vehicle
Visit a renowned dealer with a strong track record of selling pre-owned vehicles or ask references from your friends and family for best deals. You can also check out great offers on a wide variety of used cars online and approach them for best deals. Some financial institutions can restrict car loans to used vehicles not older than a specific period.
Some lenders can make exceptions but would like you to make a considerable down payment amount. Note that this first step is critical as you do not want to end up getting a loan for a vehicle which is making you pay from your pocket with additional expenses. Also maintaining necessary information, such as the car model and price and income data, before proceeding to the next step is very important in the process of availing used car loan.
Step 2: Finding the lender & getting prequalified
There are multiple avenues to apply for a used car loan. You can either go online or contact the lender offline to avail the loan. For a lower down payment, you need to get a lender who is flexible and provides multiple benefits. However, it would help if you are prequalified to be an ideal borrower in the eyes of your potential lender.
A higher credit score plays a significant role in any lender’s decision-making process. A financial institution would assess your creditworthiness to provide you with better interest rates, low down payment and other benefits. One of the better ways to improve credit scores is to make diligent payments on existing credit cards, personal loans, debt consolidation etc.
Step 3:Discussion with the lender
Here comes the most crucial part. Once you feel that you are prequalified for the loan by meeting the requirements, the next step would be consulting your financial institution representative to know the real picture. Your loan representative would discuss with you on the details of your loan, i.e. loan amount, interest rate, tenure, processing fees and other charges. Other charges might include pre-closure charges, insurance charges if applicable.
However, you would have a decisive say in most of the options offered to you. Note that the lenders are glad to provide better loan features to the borrowers whom they think have a strong financial profile. You can also check with your existing lender for a used car loan, but it is always better to look around, compare rates, use an online EMI calculator, take references and then make a decision about it.
Step 4: The documentation process
An ideal lender would keep the documentation as minimal as possible. Still, the onus is also on the borrower to provide essential documents that would help the loan process to be faster and drive towards approval. You need primary KYC documents like valid ID proof, address proof, income proof, asset proof and passport size photographs. With the advent of the digital age, lenders have made the documentation process seamless and hassle-free.
Step 5: Own your car
The final step is no surprise. If you have a healthy association with a reliable lender, they will ensure that the loan process would be quicker and you would own the car you always wanted to drive.
The real challenge for any borrower is to pick a lender among the competition and to find the lender who offers you a peaceful repayment phase.