Top 8 Myths About Pre-Owned Car Loan

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.