What is Used Car Loan

A used car loan is a financial tool that allows you to purchase a pre-owned vehicle by making regular payments over time. It’s a convenient way to own a car without paying the full upfront cost. With a used car loan, you can spread the cost of the vehicle over several months or years, making it more affordable.Check Your Credit Score for FREE

A good second-hand car can be bought with the help of a used car loan. Used car loans are provided at attractive interest rates and come with a repayment tenure of up to 7 years.  

Certain lenders provide loans of up to 100% of the car’s value. Most banks and NBFCs provide used car loans. Self-employed individuals and salaried employees can avail themselves of a used car loan.

Top Lenders Offering Pre-Owned Car Loans

Used Car loan Interest rates

Used Car Loans – Features and Benefits

The main benefits and features of a used car loan are mentioned below:

1. The loan amount that is being availed may be less when compared to a new car loan. Therefore, your monthly EMIs will be low.
2. Long repayment tenure.
3. Up to 100% financing is provided by certain banks and NBFCs.
4. The process to apply for the loan is simple and can be completed online.
5. The insurance costs and depreciation rates are lower when compared to a new car.
6. Minimum paperwork needs to be submitted.
7. Certain banks and NBFCs offer flexible repayment terms.

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Things to Keep in Mind While Applying for a Used Car Loan

Given below are some of the important points that must be considered when availing a used car loan:

1. The interest rates for a used car loan are higher when compared to a new car loan.
2. Certain NBFCs and banks do not provide a loan if the car is more than 3 years old.
3. The insurance cost will not be covered in the loan amount.

Eligibility Criteria for Used Car Loans

The eligibility criteria that must be met for salaried employees and self-employed individuals will vary and are mentioned below:

Salaried Employees

1. Age Limit: 21-65 years
2. Income: At least Rs.15,000 per month
3. Income Status: You must be working in the current organisation for at least a year

Self-employed Individuals

1. Age Limit: 25-65 years
2. Income: Must make a profit of at least Rs.1.5 lakh in a year
3. Income Status: Must be in the same line of business for at least 3 years

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Documents Required for Used Car Loans

The list of documents that must be submitted when applying for a used car loan is mentioned below:

1. Application form
2. Passport-size photographs
3. Car valuation report
4. Identity Proof: Any of the below-mentioned documents can be submitted as proof of identity:
   1. Aadhaar Card
   2. Passport
   3. Driving License
   4. Voter’s ID
   5. PAN Card
5. Address Proof: Any of the below-mentioned documents can be submitted as proof of address:
   1. Voter’s ID
   2. LIC Policy
   3. Electricity Bill
   4. Aadhaar Card
   5. Driving License
   6. Ration Card
   7. Passport
6. Income Proof: The below-mentioned documents must be submitted as proof of income:
   1. Profit and loss account
   2. Balance sheet
   3. Audit sheet
   4. Form 16
   5. Salary slip
   6. Bank statements

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How to Apply for a Used Car Loan

Follow the steps to apply for a used Car Loan:

Online Method to apply for a Used Car Loan

Certain lenders provide you with the option of applying for a used car loan online and the process is mentioned below:

1. You will need to visit the official website of the bank.
2. Provide basic details such as your name, mobile number, email ID, etc.
3. Once the relevant details have been provided, a bank representative will contact you to process the request.

Offline Method to apply for a Used Car Loan

1. Visit the bank branch or NBFC office where you would like to avail a loan.
2. Fill in the application form.
3. Submit the necessary documents to check if you are eligible for the loan.
4. Discuss the interest rates, processing fee, etc., with the lender to process the loan.

Tips to Make the Loan Application Process Easy

1. Do thorough research online to check for a lender that provides a used car loan at low interest rates and a suitable tenure.
2. Opt for an online application process. This helps in saving time.
3. You can use the car loan EMI calculator offered by BankBazaar to check the monthly payments. The calculator is simple to use and basic details such as the tenure, loan amount, processing fee, and interest rate must be entered.
4. Keep the relevant documents ready. Any delay in submitting the documents will lead to a longer time for the loan to be processed.
5. Choose an established lender so that the loan process is quick.

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Important Things to do When Buying a Used Car

Some of the important things that you must do when you buy a used car are mentioned below:

1. Check the Car: Ensure that the car is checked thoroughly. You can take the help of a mechanic to check the car.  If there are any issues with the car you can negotiate the price. Drive the car where the traffic is less, to check for any vibrations.                                                                                                                          
2. Check the Papers Thoroughly: It is vital that the insurance papers and the registration certificate are checked thoroughly. Check if the engine number and chassis number on the car match the ones mentioned on the copies. It is also important to check if the car has had any accidents.
3. Vehicle History: It is vital that the vehicle history is checked before buying it. Various details of the car can be found online. Checking the vehicle history helps to see if the car has had any accidents and if there have been any service issues.
4. Transfer the Registration Certificate: Once the car has been purchased, ensure the Registration Certificate (RC) is transferred to your name. If the car is registered in another state, a NOC is required. If the car has been purchased on a loan by the previous owner, a NOC is required as well.
5. Transfer the Insurance: The car insurance policy must be transferred to your name immediately. The insurance policy is void in case it is in the name of the previous owner even if the RC is in your name.
6. Service the Car: It is vital that the car is serviced before you start using it. In case of any rust, it must be fixed.  Change the fluids and clean up the car before it is used for the first time.

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How to use the BankBazaar Car Loan EMI calculator

You can use the EMI facility to calculate your car loan EMI. Given below are the steps you will need to follow to use the BankBazaar Car Loan EMI calculator: · Click on the link https://www.bankbazaar.com/car-loan/emi-calculator.html.

1.  In the first step, enter the loan amount.
2. In the second step, enter the repayment tenure.
3. In the third step, enter the interest rate and click on ‘Calculate’.
4. You will be able to view the EMIs you will have to pay. You can use the calculator any number of times and put any values of your choice to check the EMI payable. You can then decide the loan amount you will need, and the EMI you will have to pay based on using this facility.

Example

Given below is an example of the EMIs that must be paid in case a used car loan is availed:

Assumptions:

1. Loan Amount: Rs.5 lakh
2. Tenure: 3 years
3. Rate of Interest: 13.55% p.a.

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FAQs on Used Car Loans

• Should I make a down payment for a used car loan?Certain lenders require a down payment to be made when you avail a used car loan.
• Do I have to provide security or collateral when I avail a used car loan?No, security or collateral need not be provided when you avail a used car loan. The car acts as security.
• Can I avail a used car loan if I have a low credit score?In case of a low credit score, the application form will be rejected, or the interest rates will be high.
• Can I avail a used car loan with a co-applicant?Yes, you can avail a used car loan with a co-applicant.
• Will there be any foreclosure charges?Yes, many lenders charge a penalty in case of foreclosure.
• Is it possible to get 100% of the value of the car as a loan?Yes, certain banks provide 100% of the value of the car as a loan.
• What is the maximum loan amount that is provided for a used car?Certain banks offer up to Rs.2.5 crore as a loan in case you avail a used car loan.

News about Used Car Loan Interest Rate

Bajaj Finance transforms financing for used cars by offering up to Rs.77 lakh in high value loans

Bajaj Finance has redefined financing for the used card purchases with its high value second-hand car loan of up to Rs.77 lakh. This product has been introduced with the aim of providing financial flexibility to the customers so that they can purchase their dream cars. People can apply for this loan online and receive funds without going through the lengthy paperwork.

Courtesy To Bankbazaar

About Post Author

Lynn Jackson

aware@srvibes.com

http://www.srvibes.com

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