Have you taken various test-driven to pick your dream car but could
not proceed due to a shortage of budget? You can opt for pre-owned
cards. Most of the cars (new & used) bought in the Indian market
are financed through various banks and financial institutions.
Therefore, if you are thinking of buying a used car, getting a Used
Car Loan can help you make the purchase.
Right from choosing the
best lender to applying for a loan, there are a lot of factors
involved in getting a Used Car Loan.
So, here is a step-by-step guide on how to avail a Pre-owned Car Loan
in India and the Used Car Loan disbursement process in India.
Is Used Car Better than New Car?
Purchasing a car nowadays is no longer a luxury, rather it has become a necessity. Thus, the demand for used cars has also increased. People opt for a used car not only because of its affordability but also for the benefits it like affordability and saving, minimal depreciation, elimination of registration and other charges, and assurance and warranty of the car. For all these underlying reasons, purchasing a used car is better than a new car.
ALSO READ :- Loan For Used Cars: Here’s How You Can Get it Easily
Steps to Apply for a Used Car Loan
Before applying for a Used Car Loan, here are the following steps
you should consider:
Step 1: Finalise Your
Budget
The first thing to do before applying for a
Used Car Loan is to finalize a budget that will help you narrow down
the cars you will consider buying.
Step 2: Know the Pre-owned Car Loan Interest
Rate
The interest rate of a new Car Loan is usually
lower than Used Car Loan as they have a lower resale value. Lenders
generally provide loans up to 85-90% of your pre-owned car’s value
and in the case of a new car, even 100% finance is sometimes
offered. If you keep these things in mind, you can make these terms
work for you rather than hinder you. With the lower price of the
pre-owned car, the actual value for applying for a Pre-owned Car
Loan could work out to be more affordable than a new Car Loan in the
long run.
Step 3: Check the Loan
Details
Most buyers often make hasty decisions and pay
higher EMIs each month. However, managing your money smartly and
intelligently can help you save your hard-earned money. Therefore,
before visiting a pre-owned car dealer, you should examine their
lending options and compare the interest rates offered by various
lenders of banks and financial institutions.
Another frequent
mistake made by buyers is that they are attracted to "low
cost" EMI deals, but they pay much higher EMIs ultimately.
Using a loan calculator can give you a good idea of the expected
repayment loan amount. Please note that this may vary from lender to
lender as each lender offers Pre-Owned Car Loan at different
interest rates. Thus, it is best to focus on the total cost of your
car by calculating the amount involved in the dealer's fees, taxes,
insurance, down payment, interest, and loan repayment amount.
Step 4: Apply for a Loan
Once you have
decided which vehicle you are ready to bring home, the next big step
is to apply for a used
car loan. With many banks and financial institutions, getting
a Pre-owned Car Loan has become easier than ever. So, if you have
set your heart on a pre-owned car, you can proceed by checking the
eligibility of your Pre-owned Loan and comparing the interest rates
offered by different lenders.
Used Car Loan Application Process
Following is the process of approval of a Used Car loan
application
Step 1: Checking the Eligibility
Checking the eligibility is the first step. Institutions like
Poonawalla Fincorp have basic eligibility
requirements for a Pre-owned Car Loan. For example, if you fall
into the category of a salaried person, you may need to work for at
least two years to qualify for a Pre-owned Car Loan.
Step 2: Choosing the Right Financing Agency, Loan
Amount and Term
Interest
rates for Used Car Loan vary depending on the bank or NBFC you
choose, so it is important to choose your loan provider wisely. When
it comes to financing pre-owned cars, interest rate is around
11%.
Once the financing agency is determined, plan your expenses
to determine loan type and loan repayment term. You should also be
careful when choosing the term of your loan as it will affect the
overall cost of your car.
Used Car Loan Disbursement Process
After completing the application process, the lender will verify the details you have provided and check your credit score. If the lender finds your information accurate then they will approve your loan application and disburse the loan amount directly to your bank account.
Tips to Get Instant Car Loan
To get your car loan approved instantly, you must be aware of
following important points. This will thereby raise the chances of
approval of a loan instantly.
1. Ensure you maintain a
good CIBIL score. In this scenario, a CIBIL score over 700 will
be ideal
2. Meet the desired eligibility criteria
3.
Arrange for a down payment
4. Arrange all the recent documents
and submit them on time
5. Look for a proper repayment plan
using the online
pre-owned car EMI calculator
Things to Keep in Mind Before Taking a Used Car Loan
Like any other loan, used car loans also require adequate planning beforehand to ensure that you can pay off your loan amount within the period without any default. Thus, before you opt for a used car loan, keep the following things in mind:
- Your Credit Score
- Interest Rate
- Loan Term
- Eligibility and Downpayment
- Repayment Options
- Foreclosure Charges
To Conclude
Before applying for used car loan you must understand the eligibility and approval process. Credit score plays an important role in Used card loan approval. Make have meet all the required documents and eligibility. Poonawalla Fincorp offers Pre-owned Car Loan with simple and quick disbursal process. Apply Now!
Frequently Asked Questions
1. Can I avail a Used Car Loan without any income
proof?
No, you cannot avail a Used Car Loan without
income proof. Your income documents are required to verify your loan
repayment ability. The bank ensures that the borrower can repay the
loan on time and has a stable income.
2. What is the
maximum tenure of a used car loan?
The maximum
tenure for a Used Car Loan however depends on certain factors of
borrowers including the loan amount, creditworthiness, age of the
car and more. Poonawalla Fincorp offers a loan tenure of from 12 to
72 months.
3. Is there the option of pre-payment
of the entire loan amount?
If you opt for a Used Car
Loan, you can pre-pay the entire amount. However, the company
charges a nominal fee for availing this loan prepayment
facility.
4. Why is it important to have a good
credit score before applying for a pre-owned car loan?
The credit score reveals the applicant’s repaying capacity of the
loan. If you can meet your financial commitments on time, it is less
likely you will default on a loan. Hence, it is crucial to maintain a
good credit score before opting for a Used Car Loan.
