Buying a car is a luxury for some and a requirement for some. Even during the COVID-19 period, the importance of owning a car was felt by many individuals when they could not use public transport freely. Even as the COVID-19 impact subsides, buying a car is increasingly becoming a basic requirement for moving from one point to another. The increasing number of start-ups in the used car space has made it easier and more organized for the consumer to buy a used car.
The used car market in India is expected to grow at a compounded annual growth rate of 11% to reach 70 lakh units by FY26, up from 38 lakh in FY21. Nearly half of the used cars bought in India are purchased by first-time car buyers. Factors like an increased need for personal mobility, rising urbanization, and restricted use of public transport are contributing to this massive rise in first-time used car buyers in the country. It is expected that the trend will continue to grow as an increasing number of lenders have rolled out used car loans.
Taking a used car loan in India is increasingly becoming a seamless process for borrowers. Lenders are willing to finance close to 80 to 85% of the value of the used car that is being purchased. The borrower is expected to pay the remaining amount as a down payment and pay back the loan amount to the lender in easy monthly EMIs. The used car loan process is similar to the typical car loan process in some ways.
Here are the top 5 tips to help you get an online loan for a used car easily:
1. Select the right car
One of the most important steps in this process is to select the right car. You can buy a used car from any of the used car dealers in the market. There are quite a few new-age internet start-ups that have entered the used car market in India. Many car companies also have a used car business that caters to the used car buyer segment. There have been unorganized used car dealers that have been operating in this industry for years.
Whatever route you take among the various options, the idea is to shortlist a good used car for yourself as per your requirements. The condition of the car you select also plays an important role in your pre-owned car loan application.
Once you have been able to shortlist the right car for you, you should check all the required documents. This would include the registration certificate, insurance, and pollution under control certificate. You should also verify the vehicle identification number from the papers and the actual vehicle.
Documents are a critical component in the used car loan process as lenders expect you to select a vehicle that has all the required documents in place.
You can also check if the vehicle is under warranty or the buyer has taken an extended warranty as it would help you negotiate better with the lender for your used car loan application.
3. Check eligibility
Once you have shortlisted the car, you should check your eligibility for a used car loan. This would help you know more about the kind of requirements lenders have for extending a used car loan.
Most lenders are open to giving a used car loan if you have some work experience and a steady source of income. However, the maximum loan amount that you can get will depend on the policies of the lender and your credit score.
You just need to submit income and KYC documents to get a used car loan.
4. Credit History
One of the most important tips for getting a used car loan in India is the minimal role of credit profile. Unlike an unsecured loan, you do not need to have a very good credit score for taking a used car loan as the car is hypothecated.
You can get an online loan for a used car even with an average credit score, although the rate of interest may be slightly higher as compared to a credit profile with a good score.You will still be able to get a loan in the case of a used car as compared to other categories like a personal loan.
5. Select lender
Once you have checked your eligibility, it is time to select the lender that you want to contact to take a used car loan in India. It is suggested that you do not contact too many lenders at once and file multiple loan applications as it may impact your credit score.
You should do your homework before contacting any of the lenders. You can compare interest rates and other terms like maximum loan amount, tenure, etc.on individual websites of the lenders and third-party platforms. This would help you get more information about the kind of lenders you can contact for taking a used car loan in India. Select 2-3 lenders and enquire about your loan requirement with these lenders.
These are the top 5 tips to help you get an online loan for a used car easily. A used car helps you save money by getting you the dream car without the extra costs that are involved in buying a new car. You can get a used car in good condition almost 30-50% cheaper than a new car depending on the condition of the vehicle. You should shortlist the cars as per your requirement and select the best one from the lot. The used car market is on the rise in India and the increasing number of choices will also help you in selecting the right car.
Poonawalla Fincorp offers used car loans at an attractive interest rate starting at 13% per annum and a nominal processing fee of 1%. You can get a high loan to a value of up to 90% of the car's value as a sanction and experience end-to-end doorstep service that does not need you to visit any branch or office to take a used car loan. Apply for a used car loan with Poonawalla Fincorp.
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