A vehicle is one of the most important things which makes everyone’s life hassle-free. Whether one wants to visit a remote place or nearby, a car can make the journey effortless. However, buying a car may be too expensive for most middle-class families. But financial institutions or banks can make your dream of buying a car come true. You may think that loans only apply to a new car, but it’s a myth. If you want to purchase your car, you can get a Loan on used cars.
Yes, you can buy a loan to own a second-hand car. Most lenders in India provide second-hand car loans to purchase used cars. However, the model and age of your desirable car play an important role in obtaining a loan. Before granting you a loan, the loan provider considers both the age and model of the car, and the older the car, the harder it is for you to get a loan. However, the loan tenure of a second-hand car and the car’s age must not exceed more than 7 to 10 years. So opt for a newer used car model to get funding to purchase it.
Advantages and Features of Second-Hand Car Loans
If you opt for a used car loan to buy a second-hand car, you can avail yourself of the following features and benefits.
- With a used car loan, you can get a long repayment tenure.
- Pre-owned car loan interest rate is also lower than a new car loan as the loan amount is also lower. Thus, your monthly EMIs of used car loans will be low.
- You can easily and quickly avail of your used car loan online.
- You do not need to submit numerous documents.
- The cost of insurance and depreciation rates of used car loans are lower than a new car.
- You can get flexible repayment terms.
- You don’t need to break your long-term savings like fixed deposits to buy a car if you get a used car loan.
- You can get a used car loan even without submitting your income documents.
- You can get a used car loan with a repayment tenure of about 7 years.
- Certain loan providers grant loans of up to 100% of the used car’s value.
Important Points You Must Know Before Applying for a Pre-Owned Car Loan
If you make up your mind to get a loan on used car, then you must have to consider the given important points while availing of a used car loan:
- Some banks and financial institutions do not provide used car loans if the car’s age is over 3 years, so you must opt for a newer car model that is not more than 2 to 3 years old.
- The lender will not cover the insurance cost in the used car loan amount.
- Some banks and NBFCs offer higher pre-owned car loan interest rates than their new car loan.
Eligibility
A person must fulfill the eligibility criteria to avail of a used car loan. However, criteria may differ for self-employed and salaried employed persons, which are as follows:
Eligibility for Self-Employed Individuals
- An individual must be more than the age of 20 years old.
- An individual must not exceed the age of 65 years old.
- An individual must have been employed in the existing line of business for about 2 years.
- An Individual must have a minimum net annual income of ₹ 2 lakhs per annum for selected models and ₹ 3.5 lakhs per annum for other models.
Eligibility for Self-Employed Non-Individuals
- Applicants must have a minimum of 2 years of employment in the existing field of business.
- The minimum net annual income of ₹ 2 lakhs per annum for selected models and ₹ 3.5 lakhs per annum for other models.
- To obtain a Loan on used cars, non-individual income eligibility is on years of audited financials besides the computation of income and Income tax Returns for 2 years.
Eligibility for Salaried Individuals
- An individual must be more than the age of 20 years old.
- An individual must not exceed the age of 60 years old.
- A person has a minimum of 1 year of employment.
- A person’s income eligibility is the last 2 months’ bank statements, form 16, and salary slips.
- A person must have an annual salary of ₹ 2.4 lakhs per annum for selected models and ₹ 3 lakhs per annum for other models.
Documents Required
There are various documents you need to submit while applying for a second-hand car loan. However, here is the list of documents that you need to submit to obtain your car loan.
- Used car loan application form
- Second-hand car verification report
- Passport size photos
- You may submit any identity proofs – Voter’s ID card, Adhaar card, Passport, PAN card, or driving license.
- Submit any address proofs – Adhaar card, electricity bill, Voter’s ID card, passport, ration card, or driving license.
- Form 16
- Profit and loss account
- Balance sheet
- Salary slip bank statement
- Audit sheet
Conclusion
Pre-owned car loan interest rate is very attractive and comes with long-term repayment tenure, which makes it the most sought-after loan for everyone. You can easily apply for a used car loan with seamless and quick documentation online and offline for quick approval and disbursal of your car loan.
