Used car loan process

Step By Step Guide on Used Car Loan - Apply to Disbursement Process

July 20, 2022 • 7341 views

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.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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