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Tips to Consider While Buying a Used Car to Avoid Debt

The consumer pattern of personal cars has undergone a sea change in India. Gone are the days when people would use cars for decades and dispose of them only when it becomes a headache to maintain. Nowadays, people are quick to switch cars, thus creating a large used car market for you to explore. If you are planning to buy a used car, you can make sure that you don’t end up disrupting your finances – by following these simple tips.

Buying a Used Car

  • Stick to your need and budget

In the case of new cars, there are significant price differences in the categories. If you have the budget to buy a hatchback, an SUV would almost certainly be priced out of your budget. However, in the used car segment, the car’s age and condition can blur such differences. If you need a hatchback, don’t get tempted to buy an older SUV just because it costs the same or a little more. The mileage of the car would be different, as would be its maintenance cost. The cost of ownership may escalate if you change your choice of vehicle, thus upsetting your regular cost of ownership of the car.

  • Spot the cars on offer and deals

You are likely to find bargain deals on used cars, which can ease the burden on your pocket. Someone disposing of a sparingly used car because they are relocating overseas or a well-maintained car getting sold because the owner needs quick cash is possible jackpots that you can hit. Similarly, a used car dealer may throw in a warranty or free servicing with a car. These are the potential money savers that you should look out for.

  • Go for a used car loan.

Preferably, get a used car loan pre-approved or confirm your used car loan eligibility with your lender. This will prepare you mentally for your budget limitations and ensure that you don’t fall into a debt trap with the purchase. Beforehand, getting the approval or information will also rule out problems like a higher rate of interest or loan rejection.

  • Choose a convenient EMI.

Make sure you use a used car loan n the EMI calculator and find out the EMI most suitable for you. EMI would be a regular liability in your monthly budget. Therefore, it shouldn’t upset your personal finances. Default in repayment or EMI lapses can lower your credit score and decrease your credibility in future loan applications. Owning a car would also add regular fuel and maintenance costs, so the same has to be considered while settling on the EMI. You can reduce or extend the loan tenure to adjust your EMI amount. However, increasing the tenure would also increase the interest cost.

  • Ensure the quality

Not that it needs mentioning, but landing up with a poor-quality car can seriously escalate your regular expenses. If you are buying from an independent buyer, you can ensure the quality of the second-hand car by consulting a reliable mechanic. Try to get a documented guarantee if you are buying from a dealer.

Following these tips can help you drive home a pre-owned car in a debt-free manner. So, plan things mindfully, avail options such as a used car loan to aid your big purchase, and stay free of debt.

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