Owning a car is mostly treated as a milestone in one’s life. Nowadays, possessing a car is a symbol of independence and financial gratification. In India, the goal to own a car is only rising by the day. However, many aspiring car owners do hesitate in investing in a brand-new car.
India’s second-hand car market is currently booming, thanks to their affordability and easy availability of used car loans. According to survey reports, for every 100 new cars sold, 220 old cars arrive in the market for sale every year, and the estimate is around four million units.
If you have a consistent income source with excellent credit scores, then availing used car finance will be a cakewalk. Used car loans are readily available today, with plenty of options to choose from in the market. With informed decision-making and thorough research, you can easily manage a used car loan.
Here are a few common perks of availing used card finance:
High Loan Amount
Some lenders offer car financing up to 100% of the car’s market value or on-road price. With the availability of full-fledged finance, you can buy any car that you desire.
The loan tenure for a second-hand car loan varies from lender to lender. It generally ranges from 1 year to 7 years. The borrower can choose the term according to their convenience without disrupting their monthly budgets.
You can get doorstep assistance on the entire loan processing. From collecting the documents from your doorstep to RC transfer, everything can be done from the comfort of your home. It makes the entire process of owing a user car comfortable and hassle-free.
Some lenders provide prepayment facility to the borrower. So, when you have enough funds to repay the entire loan, you can use this facility to close it. Some user car financing companies allow you to close the loan after completing a specific period. And, some lenders enable you to prepay the loan as per your convenience. Some prepayment charges may be applicable, and it usually varies from lender to lender.
NBFCs and lenders offer either fixed or floating rate of interest on used car finances. The interest rate can vary from lender to lender, and it also depends on multiple factors such as the loan amount, your monthly income, and CIBIL score. If you have maintained an excellent credit history, there are high chances of getting a used car loan at an affordable interest rate.
A used car loan offers flexibility as you can decide on your loan amount, EMI period, and loan tenure. You can also choose a payment method as per your suitability. It can be done via online payment gateways, post-dated cheques, or Electronic Clearance Service (ECS).
For availing used car loans, the entire application process can be done online without any hassle. And minimal documentation is required, which makes the whole process relatively simple.
More about Used Car Financing
Before you apply for a used car loan with a lender, it is essential to check the eligibility. You can approach the lender for application when you meet all the requirements. The criteria for availing the loan:
- You must have an excellent CIBIL score.
- You should be a salaried professional or a self-employed individual with acceptable repaying capacity.
- The applicant must fall under the age limit stated by the lender. Usually, it ranges from 18 years to 65 years
- The required income level is different for salaried, self-employed, and companies depending on the loan amount.
Documents required to avail second-hand car finance:
Proof of Identity
- Salaried: Any valid identity proof such as Voter ID, Passport, PAN, Aadhar, Card, and an Employee ID issued by the Government of India.
- Self-employed: Any valid ID proof such as Passport, Driving License, PAN Card and Sales Tax Registration Certificate
This can be the passport, utility bill, lease agreement, or telephone bill. Address Proof requirements for self-employed and salaried individuals are the same.
- For salaried: Latest 3 to 6 months’ salary slips
- For self-employed: Income Tax Returns for two years along with balance sheet and P & L A/C, computation of income is required.
Calculation of EMI for a used car loan
EMI is the amount to be paid every month against the loan availed from the lender. EMI is the sum of two components, i.e. interest and principle. You can get an estimate of the amount of EMI on the car loan by using an EMI calculator available on the lender’s website. The EMI calculator takes in necessary personal details such as income details, loan amount, and loan tenure. It generates the approximate EMI payable for the used car loan based on the details provided.
The process to apply for and avail used car loan is straightforward. And with so many benefits mentioned above, used car loans are an ideal option to finance your purchase of the desired second-hand car.