Budget restrictions can limit our ability to travel, buy a house, or purchase a car. People who want to purchase a car for their own reasons may find it easier to get a second-hand vehicle that is less expensive and in good condition. Are you now wondering if it is possible to finance a used vehicle? Yes, you can. How do you know? This is a quick guide that will help you understand the process of obtaining a used car loan.
How to get a second-hand car loan?
* Select a car
You have many options when it comes to choosing your car. Reputable dealers will offer you a variety of choices. You can also purchase a car through a friend, or look online for one. There are some things you should remember when buying a used car. These include checking documents, checking liens and checking the car’s age.
* Complete the Loan Application Form
After you have purchased your car, it is time to apply for a loan. Lenders offer online and offline options for used car loan applications. You simply need to verify your eligibility, scan all required documents, and then click the Apply button. It takes just a few minutes to complete the online application. Online, you can check the status of your used-car loan application.
* Confirm the Loan Amount
The finalization of your loan amount is required to complete your loan application. Talk to your lender about the details of your loan amount. Check for any fees that may be associated with your used car loan. You should also consider the EMI and length of your loan before finalizing your loan. If you have good credit, you can negotiate the interest rate on used-car loans and the amount of the loan.
* Submit Documents
After you have agreed on the loan amount, it is time to submit the documents. Once the lender has approved your loan and verified your documents, you are allowed to drive your car home.
Documents required for a used-car loan
* For Salaried Employees
- Photo ID Proof: Driving License/ Copy of Voter’s ID/ PAN card/ Aadhaar/ Passport
- Income Proof: A copy of your last three-months salary slip or salary statement.
- Documents that prove residence: Passport/Copy of Ration Card/Electricity Bill
- Copie of vehicle registration certificate
- Copie of telephone or telephone bill
* Self-employed individuals
Photo Identity Proof: Aadhaar Card/Driving License/PAN Card/Passport/Voter’s ID
Sign your signature and get a copy
Address proof: Account statements/Copy of Utility Bill/ Property registration documents/ Voter’s ID/ Property tax receipt
Income Proof: Audited balance sheet, copy of Income Tax returns (ITR), Profit & Loss Statements, and the last three months’ account statements.
- Copie of your mobile or telephone bill
- Eligibility to Apply for a Used-car loan
- Before you apply for a loan on a used car, make sure to check your eligibility.
* Applicant’s age: A used-car loan is available to anyone between 21 and 65 years of age. The age factor can vary from one lender to another.
* Income: A person must have steady income. For salaried employees, the minimum monthly salary for a used car loan is Rs 20,000 and for self-employed or business owners, Rs 20,000.
* Work Experience: For salaried employees, a minimum one year of experience is required. For business owners, a minimum three years of business experience is required.
A Loan against a Used Car
* No Paperwork Required: It is easy to apply for a used car loan. It requires very little paperwork compared to other types of loans.
* This type of loan offers large borrowing amounts. A second-hand vehicle can be loaned up to 60% to 80% of its on-road value. The loans are also available up to Rs 50 lakhs. The amount of the loan depends on many factors.
* Flexibility: Used-car loans are flexible. Customers can choose the loan term, EMI, and loan amount. You can choose from many payment options depending on your preference. Some lenders offer repayment terms up to seven years.
* Low Interest Rate: Compared to other loan types, the interest rate for used-car loans is typically low.
* Low credit score: The car is hypothecated with a lender so that in the event of default payment, the lender may sell the vehicle at an auction. This loan is available to borrowers with poor credit histories.
How to get an affordable used-car loan quickly
* Compare Lenders. Do extensive online research to locate a lender who offers a used car loan at a low interest rate and for a reasonable term. Many financial institutions offer low-interest used car loans.
* Make sure you check all documentation before purchasing a used vehicle. It is important to ensure that all paperwork is correct. This includes verifying vehicle identification numbers and checking registration information. Also, you must check for any insurance papers. Your loan amount and interest rates will be determined largely by the documents you provide.
* Credit history: A used-car loan is not required to have a great credit record. If you have good credit, your chances of getting a car loan interest rate that is low increase.
* Car Condition: Make sure your car is in top working order before you buy it. It should not have any damage, dents, or accidents in the past. The car’s condition directly affects the interest rate and loan amount.
* Verify the Warranty: A warranty or extended warranty may be available on the vehicle. This could help you negotiate a lower loan offer with the lender.
