Pre-owned Car Loans have become a popular and easy financing solution for buying a used car. However, despite the increasing popularity of used car loan, there are several myths and misconceptions surrounding a Pre-owned Car Loan, especially loans that are granted by financial institutions other than banks. This blog debunks the top 8 Used Car Loan myths and highlights the facts. Take a look!
Top 8 Myths About Used-Car Loan
Myth 1: Banks Are the Best Lenders for Used Car
Loans
One common misconception is that banks are the
best lenders for used car loans. While banks do offer car loans,
they may have stricter eligibility criteria, longer processing time,
and higher interest rates than other lenders. Non-Banking Financial
Companies (NBFCs), on the other hand, specialise in offering used
car loans, may provide more flexibility, faster processing, and
competitive interest rates.
Myth 2: You Can't Get a Car Loan If You Don't Have
Good Credit Score
Many individuals believe that
a good credit score is a
prerequisite for obtaining a Pre-Owned Car Loan. It is ideal to have
750 or more credit score to apply for a used car loan and enjoy the
favourable terms such as lower interest rate. However, if you have
less the 750 credit score, you still might get the loan with slight
higher rate of interest. Also, having less than 750 credit score means
you have poor history. It is important to maintain a strong credit
history to have a good credit score ensuring that you get loan at
favourable terms.
Myth 3: Lenders Only Cater to Urban Areas
Another common myth is that lenders only cater to urban areas and
don't provide services in rural regions. However, many of these
lenders have physical branches in both urban and rural areas, ensuring
that individuals across the country have access to used car loan. They
understand the importance of mobility and aim to provide financial
solutions in all areas through their digital platforms.
Myth 4: Only Individuals Can Apply for a Used Car
Loan
Another prevailing myth is that only an
individual can apply for a used car loan. In reality, both
individuals and companies can apply for a Pre-Owned Car Loan. If you
are a Proprietor /Partner/Director with Indian citizenship and meet
other eligibility criteria can apply for a used car loan.
Myth 5: NBFCs May Have Rigid Rules & Eligibility
Criteria for Car Loan
NBFCs offers flexible eligibility
criteria for Pre-Owned Car Loans. They take into account various
factors like income, employment stability, and existing financial
obligations to assess the loan applicant's repayment capacity. This
allows individuals with different financial backgrounds to avail of a
Used Car Loan.
Myth 6: Car Dealers Offer the Lowest Interest
Rates
Many potential buyers believe that car dealers
offer you lower interest rate. However, a dealer cannot guarantee a
lower interest rate since it depends on various factors such as your
credit score, employment status, income, etc. The dealer cannot
influence these factors. While applying for a used car loan, you can
negotiate to lower the rate of interest. With a good credit score,
you have higher chances of getting loan at lower rate of interest.
Myth 7: Applying for a Second-hand Car Finance is Too
Complicated
Some individuals are intimidated by the
perceived complexity of applying for a second-hand car loan.
However, lenders nowadays have simplified the loan application
process to make it convenient and hassle-free for borrowers. They
offer online loan application options, easy documentation, and quick
approval procedures, making it simple for anyone to get a
Second-Hand Car Loan.
Myth 8: You Can Finance 100% on Your Car
Purchase
There are many lenders in the market that
promote and advertise offering 100% financing for your car purchase.
100% financing means you don't have to make any down payment.
Whereas some lenders for 90% financing or 80% financing, where you
have to make 10% or 20% down payment. It is important to check the
offerings and understand the features of your Pre-owned Car Loan
terms.
Poonawalla Fincorp makes your loan application experience
easy, and convenient. Thus, it helps fulfil used car loan requirements.
Also Read - Difference Between New vs Pre-owned Car Loan
How to Get an Online Loan for a Used Car From an NBFC?
You can apply for a Pre-owned Car Loan by following these three simple steps:
Step 1: Click on the 'Apply Now' button.
Step
2: Fill in the required details on the loan application
form.
Step 3: Upload necessary documents.
On successful verification, the loan amount will be disbursed into your bank account instantly.
To Conclude
Don't let common car loan misconceptions deter you from considering a Pre-owned Car Loan. Debunking these misconceptions helps propagate accurate information and make informed decisions. Remember to research, and compare offers from different lenders, and choose an NBFC that offers the best interest rates, flexible terms, and excellent customer service.
Frequently Asked Questions
1. Do NBFCs only offer Pre-owned Car Loan?
No, pre-owned car loans are offered by both banks and Non-Banking
Financial Companies (NBFCs). However, some NBFCs specialise in
providing Used Car Loans and offer more flexible terms, faster
processing, and competitive interest rates compared to banks.
2. Can I get a used car loan with a low
income?
Yes, you can get a Pre-Owned Car Loan with a
low income. However, you must have a good credit score to get
favourable loan terms. Factors such as employment stability, age,
and existing financial obligations also impact your used car loan.
3. Can I negotiate the interest rate on a Used Car
Loan?
Yes, you can negotiate the interest rate on a
second-hand car loan. As a borrower, you have the right to discuss
and negotiate the terms and conditions of the loan with the lender.
It's advisable to compare offers from different lenders and leverage
the competition to secure the best possible interest rate you can avail.
4. How long does it take to get a Used Car Loan
approved?
The time taken to get a used car loan
approved may vary depending on the lender and the completeness of
your loan application. Generally, NBFCs offer a quick approval
process, and applicants can expect to receive loan approval within a
few days, provided all the required documents are in order.
5. Can I prepay my Used Car Loan?
Yes,
you can prepay for your used car loan. However, it's important to
check with the lender regarding any prepayment penalties. Some
lenders may charge a nominal fee for prepayment, while others may
charge more for partial or full prepayment of the loan. It's advisable
to read the loan agreement carefully and discuss prepayment options
with the lender before finalising the application.