Buying a car has become an expensive affair. Now buying a used car is an affordable way to fulfill your dream of owning a car. With 91 percent of people still looking for bank finance for their used car purchase, it becomes even more important to be careful about your choices so that you don’t end up paying extra costs and penalties.
Used car loans are available from a variety of banks and NBFCs in India. The interest rate applied depends on several factors, including the type of car being financed, credit history, age and income of the applicant. The minimum loan amount is usually 50% of the car’s value for cash loans, with an increase to 75%-85% for EMI repayments.
- The Interest rate on a second-hand car loan is lower than new car loans.
- The Lender provides loans up to 100% of car value
- Only minimum documents required by a lender
- Flexible repayment tenure up to 84 months
- Some lenders offer loans up to 85% of car value without asking income document
Used Car Loan EMI Calculator
Whether you have an existing loan or are looking to change your loan provider and get a fresh auto loan, you can use the calculator to calculate payments based on the monthly interest rate. Plug in all the details including annual rate of interest (APR), term of the loan, and number of months at one go to know how much you will be paying every month.
The EMI calculator is the best way to calculate monthly installments of a loan product. The tool requires you to enter a few inputs like duration of loan, interest rate per annum, amount borrowed and principal down payment. Once you have provided these inputs, the EMI calculator will calculate the total value and also provide an amortization schedule for loans on a month-to-month basis for your reference.
Check your Used Car Loan Eligibility
To be eligible for a used car loan you must meet the criteria set by the lender. A credit score is an important factor in determining applicant eligibility. Check your credit report before you apply. Usually, bank to bank requirements shall differ but some of the common eligibility criteria are given below:
Age Criteria – 21 – 65 Years
Income – Rs.20,000/- per month
Work Experience – Minimum 3 years of work experience required
Employment – You must be working in the current organization for at least 1 year
Age Criteria – 22 –65 Years
Income – Business must generate profit of at least 2 lakh p.a
Business Experience – At least 3 years of business continuity
Documents required that must be submitted while applying for a used car loan are given below:
- Identity Proof- Adhaar Card/Voter ID/Passport/Driving-License
- Residential Proof- Electricity Bill/Ration Card/Bank Statement/Property Tax Receipt/Copy of Utility Bill
- Income Proof: – Copy of past 6 months Bank Statement, copy of salary Slips for last 6 months, Copy of ITR with computation, Profit & Loss Statement & Audited Balance Sheet
- Other Mandatory Documents: – Copy of Registration Certificate (RC), No objection certificate (NOC), pollution under control certificate (PUC) & other Insurance papers of the vehicle.
Things to consider while applying for a Used Car Loan
- Try to pay a higher down payment: If you buy a second-hand car, the lender will give you a loan of 70% – 95% of car value. This means that you will have to make up the remaining amount either by paying a higher interest rate or making EMI payments over a longer period. To reduce your monthly burden, you should try to pay at least 20% of the price once you have decided on the car that you want to buy.
- Your car loan application process will be hassle-free if you keep the required documents handy before applying for the loan. These include registration certificate, no objection certificate and a pollution under control certificate. Also make sure to keep insurance papers of your vehicle handy.
- When you finalize the car, you should start looking for financing. There are many options available for used cars, with most banks & NBFCs offering loan options. Compare interest rates before approaching any bank.