In India, banks and Non-Banking Financial Companies (NBFCs) make up the majority of lenders and offer used car loans for the purchase of used, pre-owned, or second-hand cars. When looking for car loans to buy a used car, the make and model of the car you choose are quite important.
Lenders take into account the age of the vehicle and if the model has been discontinued before approving a second-hand car finance application. In the case of a used car loan, the total age of the vehicle plus the loan term cannot be greater than 8–10 years. It becomes more difficult to secure enough cash to buy an older car. Choose a car that is no older than 2-3 years old and that is newer.
Advantages of Buying a Used or Second-Hand Car
- When they desire to acquire a brand-new vehicle, the majority of consumers are hesitant to get a used vehicle. But buying a secondhand car provides a number of advantages, such as:
- There are numerous organized used-car merchants today who make sure used vehicles are free of damage, maintained well, and certified.
- Instead of damaging a brand-new car, it is best for inexperienced drivers to practice driving in an older vehicle. You can select a new car and drive it with assurance once you have mastered the art of driving.
- A car’s depreciation rate is highest within the first two years after purchase. Fortunately, the depreciation costs of a used vehicle are not a concern for the owner.
- A secondhand car is exempt from sales tax.
- A used car is delivered immediately after purchase.
- You can get a high-end used car with advanced amenities with the money you would have saved up to purchase a brand-new vehicle with basic features.
- A used car requires a less down payment than a new one.
- A used car costs less than a brand-new one.
- You can buy the car of your choice without jeopardising your long-term savings plan by choosing a used car loan as opposed to an FD.
It is advised to conduct some research before purchasing a used automobile from a private seller to find out things like whether the vehicle has been reported stolen, whether it has outstanding debts, and whether it has had the necessary maintenance.
Car Loans for Used Vehicles in India
Look for second-hand car finance offers from the best lenders in the nation once you have decided on the specific make and model of the vehicle you want to buy.
Visit a trustworthy third-party website to examine different used auto loan offers, then select the one that offers low used car loan interest rates, no processing fee, the right loan term, and flexible repayment options.
Check the vehicle loan terms after selecting a reputed lender who guarantees little paperwork and quick loan disbursement.
Eligibility for Used Car Loans
Any salaried or self-employed person between the ages of 21 and 65 with a reliable source of income, a solid credit rating, and a steady job can apply for a used car loan. Different lenders have different loan terms, interest rates, and loan amounts for used cars. Because used cars have a lower market value than new cars, lenders charge higher interest rates for used car loans.
A lower interest rate is always negotiable with the lender. Additionally, due to high maintenance costs and a lack of readily available car components, the insurance cost of a used car is higher than that of a new one.
How to Submit an Application for a Used Car Loan?
As long as the combined age of the car and the loan tenure doesn’t exceed 8–10 years, banks will lend up to 80–85% of the entire value of a used car for a loan term of 1–5 years. When you go to a bank for a used automobile loan, the bank will hire a specialist to appraise your vehicle.
The bank will provide you with between 80 and 85 percent of the car’s overall value, as determined by the valuation expert. Both the down payment and the differentiation amount must be paid out of your own money.
Using an EMI Calculator
A used automobile loan is repaid in the same way as a new car loan over a predetermined loan term: Equated Monthly Installments. You can use the free online auto loan EMI calculator found on the bank website or a third-party comparison portal to determine how much your used car loan will cost you each month. The tool is simple and convenient to use.
Entering the auto loan amount, loan term, interest rate, and processing fee into the tool is all that is required. A pie chart, a bar graph, and an amortization table appear when you click the “calculate” button. The results are immediate and accurate. The periodic loan repayment schedule for your auto loan is shown by the amortization table. It includes interest payments and EMIs.
A second-hand car finance, especially a cheap one, can not only provide increased mobility but will also be less expensive than a new one. Additionally, financing your desired make and model is now simple thanks to the majority of financial institutions providing competitive second-hand car loans with low used car loan interest rates.