Unlike the old days, buying a car has become more affordable and convenient. Almost everyone owns a car nowadays. During the COVID-19, owning a vehicle has become a necessity than a luxury. The best part is that with the increasing number of second-hand cars in the market, consumers are inclined towards getting the used brand and model of their dream cars than getting a new one. It enables them to own their dream car without putting a lot of stress on their bank balance.
However, not everyone can afford to buy a second-hand car. In such cases, you have an option to apply for a car loan for a used car. It is the best option to manage your finances without putting any burden on your pocket. Most lenders offer up to 90% of the vehicle’s market value as a loan. Besides, with affordable second-hand car loan interest, making timely repayments is easy.
Benefits of getting a car loan for a used car
Getting a used car loan is simple and hassle-free. Anyone with a stable income can secure a used car loan. The best part is that there is a flexible tenure. You can repay within 6 to 60 months, depending on your affordability.
Here are the crucial benefits of getting a used car loan:
- You can secure a higher loan amount based on your repayment capacity. Some lenders even offer up to 100% of your used car’s value as a loan.
- You can avail of affordable used car loan interest rates and flexible repayment tenure.
- There is minimum paperwork and a hassle-free application process. You can submit your application from the comfort of your home.
Things to be mindful of before applying for a loan
Getting a loan comes with a responsibility to repay the sanctioned loan amount. Here are the things to be mindful of to make an informed decision:
The loan amount depends on factors, such as the insured declared value, income, credit score, etc. You can secure up to 90% of the vehicle’s insured declared value as a loan. For instance, if your preferred vehicle costs Rs. 100,000/-, you can get up to Rs. 90,000/-. You will need to pay the remaining 10% as a down payment. Keep in mind that the lower your loan amount, the lower will be your used car loan interest rate.
While applying for a second-card loan, your lender will assign an interest rate based on your income, credit score, current financial obligations, etc. It generally ranges between 10% to 20%. Also, the interest rates vary across different lenders in India. So, before making an application, it is imperative to compare different interest rates to choose one that serves you well.
Used car loan EMI calculator
Every lender has a used car loan EMI calculator you can use before applying for a car loan for used cars. It enables you to better plan your repayments. There are three components of an EMI calculator – loan amount, interest amount, and repayment tenure. You can use your lender’s online EMI calculator to determine an EMI amount based on your needs and preferences.
Lenders may not offer you the entire value of the used car as a loan. You may get up to 90% of the car’s market value as a loan. It means that you will have to pay the remaining 10% as a down payment. It is worth noting that a higher down payment fetches a lower interest rate. For instance, when you make a higher down payment, the loan amount decreases too, and the lower the loan amount, the lower will the interest rate. So, if you have the budget, it is better to make a higher down payment.
The first thing you need to do before applying for a car loan for used cars is to know your lender’s eligibility requirements. You can visit their web portal, check their criteria, and make sure to meet them before submitting your application. The eligibility criteria vary across different lenders, but here are the common ones:
- You will need to be an Indian citizen to apply for a used car loan.
- It is mandatory to be either a salaried employee of an organization or a self-employed professional.
- You must be at least 21 years old at the time of application and 65 years old at the end of the loan tenure.
- Salaried person: You must earn a minimum net monthly income based on your lender’s policy.
- Self-employed person: You must show a minimum net profit based on your lender’s policy.
- It is mandatory to maintain a minimum CIBIL score of 750 to apply for a loan.
Upon meeting the above-said requirements, you will need to ensure that you have the relevant documents, such as your identity proof, address proof, income proof, etc.