Buying a car is a dream shared by many yet realized by a few. Often the high cost of a brand-new vehicle may be disheartening for those looking to purchase one. In such cases, choosing a pre-owned vehicle is an excellent way of owning a car at affordable prices.
However, buying a used car can also be cost-prohibitive at times. If cost is the only factor keeping you from purchasing just the right second-hand vehicle, you should seek used car loans from banks or NBFCs.
What Is a Used Car Loan?
As the name suggests, used car loan or second-hand car loans are given out by banks, non-banking financial institutions, or other lending institutions for the purchase of used cars on EMI. These loans usually have a smaller principal amount as compared to a regular car loan. Used car loan interest rates also vary from one financial institution to another.
Are You Eligible for a Used Car Loan?
Have you decided to opt for a loan for a used car but are unsure whether you qualify for one? Here is a list of the essential eligibility criteria you must fulfill to get a second-hand car loan from any lending institution.
- The minimum age at which you can apply for a used car loan 21 years and your maximum age at which the loan should mature is 65 years.
- If you are a salaried individual, you must have a minimum annual income of Rs. 3,00,000 for availing of a used car loan. If you are applying for this loan with another individual, you can include the net annual income of the co-applicant to reach this income limit.
- For self-employed individuals, the minimum income limit is Rs. 4,00,000, per annum and this can include the incomes of co-applicants if any.
Some lenders might impose additional eligibility criteria for loans on used cars. Once you have chosen a lender, double-check all the eligibility details with them.
What Documents Do You Need for a Used Car Loan?
While different lenders might have different documentation requirements, here are a few primary things you will need to apply for a pre-owned car loan.
- A clear passport-sized photograph of yourself and co-applicants if any.
- Bank account statements of all the applicants for the past six months.
- Completed loan application.
- Insurance records and RC book of the used vehicle. Identification documents of all the applicants.
- Proof of residence and age of all the applicants.
Pre-owned car loans are a boon for those wanting to purchase a used vehicle without draining their savings. Before you decide on a lender, compare and contrast used car loan rates on offer to determine if you can afford them. There are plenty of lenders who offer low used car loan rates but only with longer tenures, and therefore end up charging almost the same amount of interest. Weigh all your borrowing options carefully and get your documents in order before applying for the pre-owned loan. Also, make sure to use a used car loan EMI calculator for planning your repayment.
Apply for a used car loan today to get one step closer to your dream vehicle!