According to a report, the car ownership market in India stands at 3%, creating a lucrative prospect for the auto industry. The same report stated that Indians are investing in personal cars due to environmental and economic consciousness.
However, purchasing a new car may compel an individual to invest substantial fund and spend tons on installation costs. Moreover, a new car loses its purchase value by 10% – 30% after usage. Comparatively, pre-owned vehicles are cheaper and offer better value for money.
To that end, individuals planning to upgrade from two-wheelers or public transport can double their savings by availing a second-hand car loan.
However, potential borrowers must understand the steps used in a used car loan application in detail for an informed decision.
Steps to follow for a successful second-hand car loan application
1. Compare lending institutions
To find a lucrative pre-owned car loan, a potential borrower must check whether a lending institution offers a financing option to purchase a used vehicle. Many lenders avoid lending finance for cars older than three or more years. Individuals must also scan online and offline to find lenders offering loans at competitive interest rates. Ideally, comparing various deals and borrowing cost can help an applicant make nearly 20% to 30% savings.
2. Evaluate the eligibility criteria
Lenders scrutinise an applicant’s personal and professional details before approval. This is followed to substantiate a borrower’s repayment capability and timely payments. Following are eligibility requirements for second-hand car financing –
Parameters for salaried individuals
- The applicants must fall in the age bracket between 21 to 65 years
- He/she should have a stable income source
- Applicants must be employed in a private or public organisation with a minimum of one year of experience.
Parameters for self-employed individuals
- The applicant must fall in the age bracket of 21 to 65 years
- Individuals must show a profitable revenue
- He/she must have a business vintage of at least three years.
Moreover, individuals must possess a CIBIL score of 750 or above to qualify for this loan.
3. Check the EMI and tenor
Individuals must evaluate the different factors related to lending like tenor and repayment structure. One must ensure the processing fee, interest rate, EMI pattern set by a lender are viable. In this regard, using an online personal loan calculator or similar tool would streamline this process. It is important to know that the LTV ratio on a pre-owned car loan is usually higher than on a new car loan. The loan amount also depends on the car’s valuation by a lender.
4. Initiate application
If the variables linked with a second-hand car loan suits a potential borrower, he/she can initiate an application. Typically, individuals need to fill an application form with personal and professional details and submit scanned documents online. Alternatively, one can visit a lender and submit documents manually. If the papers are correct, the credit amount is disbursed to a borrower’s account.
However, keeping up with these steps can be problematic for certain individuals. In these circumstances, one can look for a personal loan that offers substantial credit against feasible interest rates. The disbursed amount can be used to purchase any model they choose, customise a number plate, decorating the vehicle, and more since there’s no end-use restriction.
To proceed with these steps without hassle, an applicant must check everything one needs to know about personal loans for used cars.
Moreover, finding a lender offering customised features would scale up the benefits. Reputed NBFCs like Bajaj Finserv extend pre-approved loan offers that simplify the loan application process. Such offers are usually available on financial products like business loans, personal loans, etc. Check your pre-approved offers today by entering your name and contact number.
Getting a personal loan is comparatively more manageable than a used car loan. With digitalisation, individuals can apply for a personal loan for used cars online against minimal eligibility criteria and documentation.
Availing a second-hand car loan is a lucrative credit form for aspiring drivers who plan to invest in a cheaper vehicle for practice. However, fulfilling the eligibility requirements and application process can be troublesome for many. In this situation, looking for a high-value alternative like a personal loan can be a step closer to the dream car without squandering.