All you need to know about used cars loan

All you need to know about used cars loan

Written by Alinamass, In Business, Published On
February 24, 2022

Nearly every single household possesses at least one car, and some even have two. What once used to be a major achievement is now considered normal, especially with the easy availability of used cars. The strategies for buying a used car have evolved. More and more people are now turning to used car loans to purchase their ideal car.

All you need to know about used cars loan

Here’s all you need to know about used car financing.

 What does a used car loan mean?

As the name implies, a used car loan is a type of finance that assists you in acquiring funds to purchase a used vehicle. The funds are provided after taking into account a number of factors, including the car’s age, its documentation, the applicant’s creditworthiness, and others.

Similarly, the used car loan interest rate is also determined after considering several parameters. And among them, the two key influencing factors are your credit history and the condition and the make and model of the car. The better your credit score and the condition of the vehicle, the more likely you are to be approved for a low-interest loan.

What are the minimum qualifying conditions for a used car loan?

Since in a used car loan, the car you will be buying will be hypothecated with the lender. Given this, the qualifying conditions are less severe.

  • Citizenship: To obtain this loan, one must hold Indian citizenship.
  • Age: To apply for this loan, you must be older than 18 years.
  • Work experience: A minimum of one year of experience is required for both salaried and self-employed individuals.

Benefits of taking a Used Car Loan:

Second-hand car finance comes with a slew of advantages. But, to give you a few ideas, we have put together a list.

  • Pocket friendly: Borrowing an old car is substantially less expensive than borrowing a new car. As a result, even if you seek a loan, the EMI will fit into your budget.
  • Flexible repayment tenures: Financial institutions allow borrowers to choose a tenure of their own. You can use a loan EMI calculator to figure out how much you can afford to repay every month.
  • Various EMI options: Depending upon your income, you have an option to choose either standard EMI or structured EMI.
  • High loan amount: Financial institutions provide a used car loan for the value ranging from Rs 50,000 to Rs. 50,00,000. You may easily buy either a budgeted or a luxury car with this sum.
  • Easy approvals: A few personal documents, as well as a few papers related to the vehicle, must be presented to the lender to obtain this loan. The funds will be disbursed to your account once the lender is satisfied with your papers.

How to apply for a used car loan?

Financial institutions allow you to apply for a used car loan online through their website. You may also apply in person by visiting the lender’s branch office.

Offline process:

  • First, choose a lender. Once you have made your decision, go to the lender’s branch in person.
  • Discuss your requirements with the branch executives.
  • Share the required documents as it will help the branch officials to determine your eligibility.
  • If you are found eligible, the lender will ask you to fill out a loan application form.
  • On the successful submission of the offline form, the executives will discuss a loan amount, used car loan interest rate, and loan tenure. They will also assist you in identifying the ideal tenure for you.
  • Once you agree to the offer made by the lender, the funds will be disbursed to your account shortly.

Online process:

  • Visit the used car loan page on the lender’s website.
  • Use a loan EMI calculator to get an idea of how much EMI you can easily pay every month.
  • Go to the used car loan section and tap on the ‘Apply’ button.
  • Enter all the mandatory fields, submit your KYC documents, and click on the submit icon.
  • Following the submission, the financial institutions will evaluate your profile and perform a risk assessment. Once they are satisfied, the funds will be credited to your account after a few more formalities.

Few important points to keep in mind when applying for a used car loan

  • Before you apply for a loan, explore the used car market to find the perfect car.
  • Check to check if the car has all of the necessary documents, such as a registration certificate, a receipt for road taxes, and insurance papers.
  • Don’t hesitate to negotiate with the car dealer. Remember, the loan amount and the used car loan interest rate are both directly linked to the car’s value.
  • Compare different lender offers using loan aggregator websites.
  • Take your time to thoroughly comprehend your loan arrangement.

To Conclude:

Now that you are aware of the important aspects of a used car loan, you can apply for one right now.

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