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Used Car loans – Ways to get the best offer and Eligibility Criteria

How Do I Qualify for a Car Loan? - Experian

If you have just hopped onto the corporate bandwagon, and looking to avoid the variables of your daily commute to work, you would think of buying a car. Or if you have a big family, and your work commitments keep you away from home, you may want to buy a second car for your family. Perhaps, you may already own a car, and wish to go for an upgrade into the luxury segment.

Whatever your requirements, buying a car has become a necessity today, and the CoVID imposed lockdown since March 2020, has only brought back the charm of owning a vehicle, even for residents of cities that boasted of robust public transport. Though purchasing a new car is everyone’s wish, there is a vibrant market of pre-owned and used cars providing good deals.

Buying a pre-owned car saves money, especially when the automobile market is dynamic and constantly evolving. You can enjoy your preferred car for a few years, and go for a change whenever you wish to. The used car segment gives buyers a wide range of options to choose from, without having to dive into their savings. What’s more, you can also get finance for the purchase of a used car.

However, there are few things to be checked before you can apply for a used car loan.

  1. Do a Lender Check—Online or in-person

You can visit the website of the lender or just walk into its nearest branch to get more details.

  1. Check Details:

Get yourself acquainted with the used car loan eligibility criteria, its repayment tenure and EMI. There are used car loan EMI calculators available online to give you a fair idea.

  1. Used Car loan Interest Rates and Eligibility

The amount of loan that may be approved depends on the valuation of the used car, done by lenders. The Loan to Value (LTV) ratio varies from lender to lender. Some lenders finance only 75-80% of the valuation of the car, and some provide up to 100% of finance as well. Also, some lenders operate specifically in a particular segment. Though the tenure of a used car loan is five years, it depends on the age of the car.

Here, it should be kept in mind that used car loan interest rates are ideally higher with a lower LTV ratio than a new car loan.

Hence, while zeroing on a lender, you must run all these checks, before putting in your application. From the lender’s perspective of used car loan eligibility, a prospective borrower must be between 21 and 65 years of age, have a minimum income of Rs. 20000/- per month, with stable employment of minimum one year, in case of salaried and Rs. 2 lakhs per annum, with the stable business for minimum three years, in case of self-employed.

  1. Documents Required:  

To apply for a used car loan, you need to submit documents evidencing your identity, address and income.

  1. Important points to be kept in mind:
  • Verify all original documents are in order. In case, there is existing hypothecation on the vehicle the seller should arrange for a NOC from his lender,
  • Verify for any pending charges against the vehicle, and ensure it is paid before you take possession.
  • For inter-state purchases, ensure that the seller arranges the registration in your home state smoothly.

Today, with the varied options of finance available, owning a car has become only a matter of decision. With used car loans available, you can own a certified car, without having to worry about erosion in savings. Keep in mind, above pointers to make your journey of owning a used car, smooth and hassle-free.