We have "Used Car Loan" for you
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Many people are more attracted to buying a used or second hand car than getting a new car. While people usually do this to save money and prevent loans. However, one thing you cannot disagree on is that a used-car loan not only helps your budget live within decent limits but also keeps your credit line healthy and- wealthy. So, let’s cut to the chase and unfold what you need to know from how to get a used car loan to everything else.
A used car loan, also known as a second hand car loan, is a type of loan that is availed for the purchase of a used car or a pre-owned car. This type of loan is a value-for-money kind of a take when you want to keep your budget and finances in order.
Used car loans can be bought at decent interest rates and can be repaid during the tenure that goes up to 7 years. Many banks and financial institutions provide second hand car loans. However, there is a lot more to keep in mind about this type of loan than a mere meaning. Let’s dig deeper into that.
If you are wondering how used car loans work and what benefits they really earn you then you need to know about some important features and benefits it brings you. Before anything else, second hand car loans are usually low in amount compared to the new car loans, thus you get the perk of low EMIs every month.
Here are the other important features and benefits of a used car loan:
Used car loans come with a long tenure for repayment.
Certain banks and NBFCs avail up to 100% financing for it.
The procedure to apply for a used car loan involves minimal work and can be followed online, comfortably.
It features a flexible repayment plan, as provided by many banks.
The depreciation and insurance rates of a used car are lower than a new car.
Second hand car loans are a smart act when it comes to avoiding financial burdens. Now that you know its major features and benefits, let us walk you through different types of used car loan.
| Lender | Interest Rate | Repayment Tenure |
|---|---|---|
| ICICI Bank | 10.20% - 17.51% | 5 years |
| State Bank of India | 9.90% - 10.90% (CIC based rates will be applicable) | 5 years |
| Tata Capital | Starts from 15% | 5 years |
| HDFC Bank | 13.75% - 16.00% (Rack Interest) | 7 years |
| Punjab National Bank | Starts from 7.80% | 5 years |
| Bajaj FinServ | Contact the bank | 5 years |
| Axis Bank | 14.80% - 16.80% | 5 years |
| Kotak Mahindra Bank | Contact the bank | 5 years |
| Mahindra Finance | Contact the bank | 5 years |
| AU Small Finance Bank | 12.5% - 18% | 5 years |
If you wish to avail a used car loan, you must meet certain criteria that is designed to determine if you are eligible for a loan.
Eligibility criteria for salaried individuals to get used car loans
The age of a salaried individual must be between 21 to 65 years.
The individual must earn at least Rs. 15,000 per month.
The individual must be in the current organisation for about 1 year, at least.
Eligibility criteria for self-employed individuals to get used car loans
The age of a self-employed individual must be between 21 to 65 years.
The individual must make at least Rs. 1.5 lakh a year as profit.
The individual must be in the current business for 3 years, at least.
Meeting the eligibility criteria decided by banks/financial institutions will help you apply for a used car loan without a doubt.
Comes the most important question and we have got you the answers the simplest way out there. You need to follow the steps mentioned below in order to apply for a second hand car loan:
1. First things first, you need to finalize the used car which you want to buy.
2. You can apply for a used car loan using two different modes:
3. You need to discuss the loan, EMIs, tenure and every important detail with the lender before you finalize the deal.
4. Now, you need to submit the documents. You need to attach all the required documents with the application form and share it with the bank or NBFC.
The length of time this procedure takes for completion varies from lender to lender. However, it does not take months and usually gets approved in a short span of time. Once your used car loan is approved, you can take hold of the steering and drive it to wherever you want.
You need to submit following documents in order to get a used car successfully:
Loan application form
Car evaluation report
Passport-size photographs
Address proof: Aadhar card, PAN card, driving license, voter’s ID card or passport.
Identity proof: Aadhar card, electricity bill, driving license, voter’s ID card, passport, LIC policy or ration card.
Proof of Income: Balance sheet, profit and loss sheet, form 16, audit sheet and bank statements.
Interest rates are a concern which makes sense while applying for any loan. When you are planning to get a used car loan, you may need to go down the lane and review your choices such as car model, its age, and of course, your credit score that determine the used car loan interest rates.
Here are some important factors that determine used car loan interest rates:
1. Vehicle Model and Its Age: The model and type of car you want to buy is going to affect the interest rate on loan. If you wish to buy a flashy used car then the interest rate which you will be asked to pay will be higher. Apart from that, age of the used car you are buying will also determine the loan interest rate.
2. Credit Score: Those who have a good credit line stand eligibility to get lower interest rates on used car loans than the ones who don’t.
3. Duration of Loan: Loans with long repayment duration carry more interest rates than the loans that have short term repayment. Thus, if you are opting for an option to repay your loan for a longer period than you will have to pay a higher interest rate.
FAQs On Used/Second Hand Car Loan
In order to apply for a used car loan using the online mode, you can simply visit the website of the bank or NBFC which you are seeking for a loan from.
You need to submit the following documents when applying for a second hand car loan:
Loan application form
Car evaluation report
Passport-size photographs
Address proof: Aadhar card, PAN card, driving license, voter’s ID card or passport.
Identity proof: Aadhar card, electricity bill, driving license, voter’s ID card, passport, LIC policy or ration card.
Proof of Income: Balance sheet, profit and loss sheet, form 16, audit sheet and bank statements.
Most of the banks and NBFCs ask for a down payment for a used car loan.
When you apply for a second hand car loan with a poor credit score, there are two types of scenarios that can happen to you:
Your application will be rejected.
Or you will have to pay higher interest rates.
Know More About
You're eligible for a Used Car Loan if you:
Are legally adult enough to handle it
Have still got it
Get a regular pay check
Make more than a basic buck
Your eligibility depends on:
Earn more than minimum income required
Maximum allowed Used Car Loan is Rs. 10K to Rs. 45 lakhs
EMIs of other loans loweryour eligibility
Boost your eligibility by:
Pay off your credit card bills
Choose longer tenure loan up to 5 years
Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:
- 1. Photo ID and age proof
- 2. Signed application form with photograph
- 3. Residence proof
- 4. Last 6 months bank statement
- 5. Documentation for salaried applicants:
- Last 3 months salary - slips
- Form 16 or Income Tax Returns
- 6. Documentation for self-employed applicants:
- Last 3 years Income Tax Returns with computation of Income
- Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account
Updated on 25 Nov 2017
| Used Car Loan Details | |
|---|---|
| Interest Rate (Monthly reducing balance) | 12% - 20% |
| Processing Fees | Varies with bank |
| Loan Tenure | - year to 5 years |
| Pre-closure Charges | Varies with bank |
| Guarantor Requirement | Varies with bank |
Used Car Loan EMI Calculator