Are you exhausted from finding your dream car? After giving multiple test drives to a number of vehicles, you failed to proceed with buying the wheels you want due to budget constraints. Well, we understand that it can be really bothersome!
Believe it or not, but an uncountable number of cars bought in the Indian car market through finance with the help of various financial institution and banks. In this contrast, if you have a car model in your mind, getting aid through a second hand car loan can help you purchase the wheels.
4 Factors That You Have to Take into Consideration
The car loan for pre-owned cars makes it easy for the buyer to repay the principal amount in the form of flexible EMIs. Moreover, it also saves you the outcast hassles of having to drop hard-earned money in one shot. Hence, continue reading to know the factors you should consider before obtaining a previously owned car on loan.
- Loan Amount: Not each individual requires a similar loan amount for a used car. For example, a Swift model of 2017 that drove 13000 km can cost around Rs 5 lakh to Rs 5.5. lakh. On the other hand, a 2014 Tata Indica model that drove almost 50,000 km can cost you anywhere less than Rs 2.5 lakh in the Indian used car market.
Clearly, before applying for the loan, knowing your eligibility for the loan amount is crucial because your second-hand loan for a car should cover the expense of the vehicle. You can also calculate your EMIs and interest rates online through a loan calculator to verify how much the pre-used vehicle loan value will finance the car.
- Loan Eligibility: Almost every second person aspire to become a proud car owner. And, with the availability of loan, finance is no more a problem these days. However, the loan eligibility criteria can limit many from obtaining capital to purchase the car they might have their eye on. In India, several financial lenders have age restrictions.
And, others prefer approving loans to buyers having 5 years of experience. Besides, some lenders also have condition ascribed with the loan eligibility. For example, the borrower needs to be with his/her current employment for more than a year.
However, loan qualification can execute it seems like a cross-country competition, with ample twists and turns. Aside, some financial institution in India eventually offers loan to government employees and private plus public sector organizations’ employees. In that case, the applicant must be a minimum of 21 years. Plus, the appellant must have 2 years of work experience with at least 6 months of present employment experience.
- Loan Documentation:Most lenders understand that much documentation can be a hassle and can delay the procedure, including your spirit of buying the car. Hence, lenders reduced the need for abundant documents to appeal for a second hand car loan. Hence, you only require to submit 6 documents:
- Identity proof (Voter card/ Aadhaar card/ Passport/ Pan card / Driving license)
- Last 3 months of salary slip
- Bank account statement for at least last 6 months
- Address proof (Utility bills/ electricity bill/ Passport/ Ration card)
- Copy of your mobile or telephone bill, and
- Copy of the registration certificate of your vehicle
- Custom-made EMIs:Since the world is twirling around customization these days, so do EMIs. From food, fashion, travel to fun – everything around gets tailored nowadays. So, why not your repayment of pre-owned car loans be any different? Banks and NBFCs in India allow the borrower to choose flexible EMIs having control over it.
People with consistent earnings can always go for a pre-designed EMI. But, if you expect a rise in your income at regular intervals. Then a structured EMI option would be great for you. However, through structured EMIs, you would have the right to decide how you want to return your credit by choosing from host options like post-dated cheques, ECS or online payments.
Now that you understood the factors – let’s discuss do’s before applying for the pre-owned car loan.
Dos’s before applying for a pre-owned car loan
- Settle your budget
For a used car loan, there is no limit for the loan amount. You can apply for as much as you want the far you are eligible for the credit. So, the first thing you have to do before applying for the loan is to settle for a budget that will help you narrow down the wheels you would like to consider buying. Once planned, you can select the car that fills your requirements.
- Understand the terms of a pre-owned car loan
It is not unknown that a new car loan fetches much lower interest rates than used car finance even though you finance a lower amount of total car value. Financial institutions and banks, in general, offers loan amount up to 80-90% of the value of your second-hand car. But in the case of a new vehicle, the borrower will get 100% finance of the total car value from the lenders.
Notwithstanding, keeping these factors in mind can help you make these terms strive for you instead of stop you. So, if you select a used car with a lower price, the original value for applying for the previously owned car loan could work out for you to be more budget-friendly than a brand-new car loan in the long run.
- Design your expenses
The majority of car buyers often decides on the loan hurriedly. Hence, they end up shelling out tangible EMIs every month. However, if you wisely and smartly design your finances, it can aid you to protect your hard-earned funds. So, before you visit the second-hand car dealer. You must closely watch the financing options of your bank. And compare the offered interest rates with the financial institutions and private corporations.
Final thoughts:
Now, you, too, are aware of things related to a second hand car loan. You can now add your status as a car owner freely. In India, getting a loan for a used car is not that difficult as dividing dust from grains. It involves custom-tailored payback options, more confined paperwork with instant approval and competitive interest rates. You only required to keep the factors mentioned above in mind, and the car is yours!.
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