According to a recent report, the Used car loan market in India is predicted to grow at 10% CAGR by 2024. This growth can be attributed to the need for a private vehicle at affordable pricing.
Many individuals prefer investing in second-hand cars for practising purposes. However, before opting for a second-hand car financing, potential borrowers need to keep a few things in mind for an informed decision.
What are the things to know about a Used car loan?
Potential borrowers can consider these factors to streamline their used car purchases and financial preferences:
Every borrower, irrespective of credit type, should check the eligibility parameter laid down by a lender. Though the requisites against a used car loan differ from lender to lender, the standard requirements remain the same.
For instance, a lender may assess repayment capacity, credit score, vehicle’s current value and more. The common eligibility parameters include:
- Must be a resident of India
- Age of the individual must be between 21 years and 67 years
- The salaried individual should be employed in an MNC, private or public organisation
- Should have a credit score of 750 or higher
Apart from eligibility, a borrower has to fulfil the documentation to avail a pre-owned car loan. The lenders require submitting the documents to scrutinise an applicants reliability.
The common documents required by a lender are-
- Third-party insurance policy
- Car’s registration
- Road tax receipt
- Form 32 and 35
- Car invoice
Lending institutions may ask for additional documents like KYC, bank account statements, employment details and more before approving.
Used car loan Interest rates
A second-hand car loan is generally a secured credit form available at an affordable interest rate. However, the second hand car loan interest rate completely depends on two factors vehicle’s condition and the applicant’s age.
Nevertheless, potential borrowers should compare different lenders to secure compatible interest rates for this credit.
The lenders decide the LTV on an old car loan after evaluating the car’s current value. They assess the following pointers when deriving the car value-
- Distance travelled or covered by the car
- Car usage and type
- Place of use
- Modifications or repair
Registration certificate and insurance policy
Insurance papers and registration certificates are the two documents essential for a Used car loan approval. Potential borrowers must collect these papers from the vehicle owners before purchasing. This will substantiate the car value and authenticity.
However, if individuals plan to purchase an expensive car, they can opt for high-value options like get a personal loan. This credit form comes with simple eligibility and documentation making the loan application and approval hassle-free.
It also comes with usage flexibility, making it an ideal option for individuals desiring an expensive card model. Borrowers can also make big-ticket spending or invest the fund in personal expenses.
The collateral-free advance and the easy disbursal process for a personal loan makes the credit form a better financing tool.
Most leading finances extend a personal loan to credible borrowers. They also provide personalized offers that make borrowing hassle-free.
For instance, leading financers provide pre-approved offers that simplify and expedite loan applications. These offers are applicable on various financial products like personal loans, business loans, etc. Enter your name and contact number to check your pre-approved offer within seconds.
However, individuals have to improve their credit score to gain the said credit form. Technically, a good credit score can help them get better terms on their personal loan for a used car. They can select the preferred repayment structure for lucrative savings.
These are the crucial factors of a second-hand car loan that a potential borrower must learn. They should read the terms and conditions before making a final borrowing decision. However, if the fund seems insufficient, they can opt for alternatives like a personal loan. This credit form comes with maximum benefits and affordable deals.