The Indian second-hand car loan market is anticipated to grow at a CAGR of more than 11% in terms of value and touch a figure of USD 16 billion by FY27. The expected growth can stem from the increasing disposable income, and factors like the high price of new cars and government regulation can further accelerate the growth.
Nowadays, cars have ceased to be only a symbol of luxury and have become a necessity. Hence, individuals who are willing to avail a used car on loan (such as a personal loan) must know certain things to maximize benefits; read on.
Four Things to Know While Availing of a Used Car Loan
Following is a list of factors/pointers that individuals must know before taking a used car financing.
Eligibility criteria and documents
Learning about the eligibility criteria is one of the primary steps to availing of a second hand car loan. The eligibility criteria may vary from one lender to another. Further, the required criteria can also vary as per employment status.
However, the general criteria include that the applicants must be residents of India. Their age must be at least 21 years while submitting the application. They must have a fixed salary and credit score of 750 or above to avail of the loan.
Individuals must also learn about the documentation process, apart from knowing the eligibility criteria. If individuals are willing to get a second-hand car on a personal loan, they must accumulate basic documents such as identity, address proof, bank account statement of the past three months, and salary slip of the last two months.
Having a clear knowledge of eligibility criteria and documentation can help an individual to apply for a personal loan for used cars online.
While availing of a second-hand car loan, individuals must know that the sanctioning of the loan amount depends on the loan officer of the lending company. Here, the loan officer inspects conditions of second-hand cars and other parameters, which can vary from one lender to another.
Most of the time, lending institutions approve 70-80% of the car value, which means borrowers have to pay the rest of the amount. In such cases, individuals can opt for a personal loan and tally if they are eligible for the entire amount to get the second-hand car, so they do not have to pay a single penny from their pocket. Notable NBFCs like Bajaj Finserv offer high-value personal loans to eligible applicants.
These NBFCs also provide pre-approved offers to streamline the loan availing process. These offers are also available on other financial products such as personal loans and business loans. Individuals can check their pre-approved offers by entering their name and contact details.
The tenor of second-hand car financing, if availed through a personal loan, can range from 12 months to 60 months. However, the tenor can vary from one lender to another. While choosing a tenor, individuals must assess their financial standing and existing liabilities. This will help them to repay (via EMI) the loan amount comfortably. Here, applicants must remember that a longer loan tenor can reduce the EMI burden. However, it will end up increasing total interest outgo and vice versa.
The difference between interest outgo for different tenors is massive. Hence, borrowers must be careful about choosing an ideal tenor.
Interest rate and processing fees
Interest rate plays a crucial role in deciding the overall cost of borrowing. The higher the interest rate and the longer the tenor, the higher the total loan amount. The interest rate offered by lenders varies from one another. Hence, applicants must conduct market research, compare the rates and select the most affordable one. Remember, individuals with high credit scores have better chances to secure a personal loan at the lowest possible interest rate.
Apart from the interest rate, individuals must find out processing fees, late EMI payment charges, and other charges so that any hidden charges will not dupe them in the future. Hence, individuals must learn everything about personal loans for used cars.
The above-mentioned article provides essential information that individuals must know while availing a second-hand car loan. This information will help them secure the best deal in a hassle-free manner.