Beware of these mistakes while taking a Used Car Loan
Posted: Jan 01, 2020
Cars inspire awe in you and you want to own one as quickly as possible. Often, you throw caution to the winds and get carried away by the numerous offers made by various stakeholders in the auto industry and you fall into the trap of committing to buy a car, sometimes availing a secondhand car loan. Remember, a car is a major investment and it impinges on your finances in more ways than you can imagine. So, before you venture out to look at used cars, it is prudent for you to go through the typical mistakes people like you could make while acquiring a car through a secondhand car loan.
The mother of all mistakes is the scant respect you show for research. In today’s Internet-connected world you can ill afford to skip research. Unlike in the past research is quite easy and rewarding and what is more almost instantaneous. You could look at a variety of things from the types of used cars on offer, the numerous benefits offered by used car dealers, the terms of a used car loan, possibility of iteration of loan parameters to features of the car you wish to buy. When you have all the information needed then you can be reasonably sure that you would make a considered and well-researched decision. There is no substitute to research and you will ignore it at your peril.
Imprecise Loan Amount
Human tendency is typically to grab an opportunity when it offers itself. This is especially true when you are availing the used car loan for the purchase of your car. You are a well-respected person earning a good income and when your income is more than sufficient to cover the repayment of the secondhand car loan you tend to let your guard down and perhaps think of taking a higher amount than is required for the purchase. This is another mistake that you should avoid. You should treat the used car loan only for the purpose it is meant for and not to ride piggyback on it for some other purpose just because the loan is there for the asking. It is in your interest to spend some time and effort in researching and arrive at an almost precise used car loan amount.
Often, you are faced with choices – should you go for economy (fuel consumption) or speed and acceleration (power) from your car. This is never easy to resolve. Now, this dilemma becomes more complex when you have to decide on the amount of loan, tenure, type of car, brand of car, Tata Capital or someone else, interest rates and so on. These decision making pitfalls can trouble you no end, but the reality is that you have to decide. Therefore, you should try and optimize considering all the relevant parameters. Your research would help you crystallize some of the advantages and the constraints pertaining to your used car loan. When you look at them objectively you would be able to make decent decisions. One way to do this is not to give equal weights to all parameters but weigh them based on their importance. This way you will avoid making sub-optimal choices.
Disregarding Credit Score
An important element that affects the used car loan terms is the credit score. As you know the credit score is an independent third party assessment of your past loans. If you have been servicing them well then, your credit score would be reasonably high, and you can command better terms from your lender. It is always good to keep a handle on the credit score to ensure that there is no misreporting of your repayments. This is an important factor you must consider and not miss out. In fact, on loans extended for purchase of used cars the credit score is an important element for any lender to assess your creditworthiness.
Ignoring Fine Print
No one would want to default willfully. Invariably there is some complication which may crop up and make you default on your repayment. But you would be penalized with charges and fees which will upset your calculations and sometimes even result in confiscation of your beloved car. So, without feeling any qualms do not ignore the fine print of your contract. Study them thoroughly and understand them to know what the ramifications are if you breach any of the terms. Reading the fine print could help you make a better decision on the second hand car loan terms and even the lender you want to do business with.
These are just a few of the areas where mistakes could occur, and you should guard against them and consider them carefully before you approach Tata Capital for a used car loan.
A mother of 2 lovely kids. Digital Marketer by profession and a blogger by passion! Here to inspire and motivate people with my writing.