Best Tips to get the right loan for a second-hand car
The market for second-hand or pre-used cars is more significant than the sale of new vehicles in India. It is especially true for first-time buyers. If you are one among such a second-hand car aspirant and are worrying about the funds to buy your car, stay calm. You can avail of a loan for your pre-used vehicle, just like two-wheeler finance, from a bank as well as NBFC. Consider these tips before you plunge into any borrowing for the purchase of your pre-owned car to make the right decision:
Tips to consider before selecting a used car loan
It is essential to keep these points into consideration when you plan to take a used car loan. These are the Best Tips to get the right loan for a second-hand car:
Rate of Interest
The lenders are generally hesitant to finance a second-hand car at affordable interest rates. The loan to finance a used car comes with a higher interest rate than the loan for the new vehicle. You can negotiate the interest rate if you have a good credit score. A personal loan can also be an excellent option to finance a used car at affordable interest rates.
The lenders will ask for several documents for the application and approval of a used car loan. Most of the lenders will approve your loan only after the dealer or the seller transfers the car title to your name. The bank or NBFC may not sanction the loan if the Registration Certificate is not in the seller’s name or if the seller has not renewed the car insurance. Here is the list of documents that must be handy at the time of loan application:
- Car valuation report
- Passport-size photographs
- Anyone Identity Proof: Aadhaar Card, Driving License, PAN Card, Passport, Voter’s ID
- Anyone Address Proof: Aadhaar Card, Driving License, Electricity Bill, LIC Policy, Passport, Ration Card, Voter’s ID
- Anyone Income Proof: Audit sheet, Balance sheet, Bank statements, Form 16, Profit and loss account, Salary slip,
- Loan Amount
The loan amount depends on the used car model, its condition, your income, and your credit score. The lenders have their car valuation process, and on that basis, they decided the loan amount. You may get 605 to 80% of your car’s value if it is in good condition. The remaining amount has to come from your pocket or other sources like funds pooling from friends and family.
- Loan Tenure
The loan term is flexible and varies from one to the other lender. The maximum tenure is generally five years, with some lenders extending it to 7 years. On the other hand, some lenders give funding for even lesser time. If you fail to repay the loan amount within the stipulated time, you are liable to pay hefty fees and penalties.
- Loan application and approval Process:
You can apply for a used car loan by offline and online process. For the offline method, you will have to visit the lender for the application and document submission. The disbursal of the loan amount may also take 5 to 7 days after document verification. On applying for a personal loan to buy your car, you have to follow the same procedure, but the documentation will be fewer, and the loan approval and disbursement will come quickly. Above all, These are the Best Tips to get the right loan for a second-hand car.
Points to consider for easy Loan Application Process
- Thorough online research to check the prospective lender, which offers a used car loan at a low-interest rate, will help make the right decision.
- Online application mode will save time and effort and ensures quick approval.
- Online car loan EMI calculator available on all the lenders’ websites will give an idea about the EMI. You can compare the loan terms of various lenders by this and can select the most suitable one.
- Always keep all the loan-related documents ready and submit them on time for quick loan approval.
- Choose the right car, complete all the paperwork and select the lender offering the best deal. Select a loan with the lowest interest rate and affordable EMI
In this article, “Best Tips to get the right loan for a second-hand car”. A used car loan can help you fulfill your dream of owning a four-wheeler when you do not want to buy a new car and cannot afford to buy a pre-owned one with your funds.