Used
car financing
Used
cars can get finance from banks,
credit unions, dealers, financial
institutions and private individuals.
Checking out the different financial
opportunities in order to make comparisons
is a good idea. When inquiring about
rates and terms, check out the finance
options for a specific model.
Most
financers do not provide loans to
vehicles that are more than 5 years
old because of the low resale value.
Examine
different used car insurance
deals and select the one that suits
you best. Ask yourself- Can you
afford to pay insurance premiums
along with the car payments?
used
car maintenance costs and
unexpected repairs should also be
considered while applying for the
loan. Allow a little extra in your
budget to meet these expenses.
Documents
Required
You
need to collect certain documents
to submit along with your loan application:
Warranties:
All dealers are required by federal
law to let buyers know whether a
used car is being sold with or without
a warranty. Used car dealers in
your state must clearly display
information on services and guarantee
in writing in the contract. The
final copy of the buyer's guide
must list the parts and services
covered.
Odometer
Statement: Federal
law considers tampering with
odometer a felony. Regulations
require the seller of any used
vehicle to state the odometer
mileage upon transfer of ownership.
Get a copy of the odometer statement
when you sign the contract.
Insurance:
Most financiers will ask for insurance
cover on your vehicle, some may
even offer to include the cost of
the insurance - but whatever the
case the law requires you to have
liability insurance. Some lenders
may even ask for collision insurance.
Understand all of your insurance
responsibilities before you apply
and have all the papers ready.
Vehicle
History Report: This is
a great resource while buying a
used car. Some financiers insist
on one. A used car check can reveal
reported wrecks, recalls, damage
due to flood, fire or accidents
and even odometer fraud. For instance,
flooded cars will face problems
such as:
•
Electrical system failure
•
Transmission failure
•
Anti-lock brake system failure
•
Airbag failure
•
Mold and musty smell
•
Rust
A
credit history report will save
you from being conned into buying
a flooded car.
Every
car has a different VIN number which
carries all information, that has
been officially reported about the
car.
Certificate
of Title: This refers to
a certificate issued by a title
company or a written opinion by
an attorney that the seller has
good marketable and insurable title
on the car that he is offering for
sale. The dealer is required to
register and transfer the tag and
title of the vehicle in your name
within 20 working days. He is required
by law to provide you with the original
receipt and original title.
Certificate
from reputed garage/mechanic:
Most banks accept a certificate
from a reputed garage or mechanic
determining the market value and
the residual life of the car. Some
lenders on the other hand send agents
to assess the value of your car
by examining the mileage, condition
of the engine, the physical appearance
etc.
Bill
of sale/Deed of sale: Some
banks also ask for sale deeds to
verify sale deals.
Vehicle
information: Information
about the vehicle's make, model,
manufacturer, year, purchase price,
VIN should also be provided.
Personal
Financial Information that must
include income, outstanding debts,
assets, credit history etc.
After
you submit the necessary documents,
the bank will check your credit
history and ascertain the loan amount.
If satisfied, loans that cover between
70 per cent and 80 per cent of the
market value are sanctioned.
However,
the interest rates for loans are
much higher than they are for new
cars. The interest rates again vary
based on the model, the year of
manufacture, the condition of the
car and loan term. The loan tenure
is also much lower than that for
a new car.
The
paperwork is the same as that for
a new car but the processing fee
is higher for second-hand cars.
So be sure to check the APR.
You
can negotiate the interest rate
depending upon your loan amount,
loan tenure and how much down
payment you make.
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