The tremendous threat of the Covid-19 pandemic has forced people to commute in a private transport system like a two-wheeler or four-wheeler. Though the pandemic has made the buying process of a car much affordable, purchasing a four-wheeler remains a dream for many despite a plethora of financing institutions, banks and fresh financing schemes available in the Indian market. People being unable to meet the car loan eligibility criteria is creating the main hindrance for buying new gear, such as income source, work experience, etc.,
Besides, every different car model presents distinct criteria for the buyer. Perhaps you would want to purchase a super or premium car model, yet your moderate wage is creating the roadblocks on your success avenue. Hence, finance for second hand car is a proven idea that you can consider as a beneficial option.
However, before you apply for a used car loan, you should make sure to experience a bumpy-free ride while your used car loan journey by preventing any potential intricacies. And, to help you smoothen your track, we have listed a host of factors to guide your correct path.
Factors to take into consideration:
- Interest Rate: The interest rate for a second-hand car loan is the most crucial factor that a borrower should look into when the lender offers the loan. The less your rate of interest, the lower your repayment sum will be. However, the interest rate on second-hand car finance ranges from 13%-20%/annum across Indian lenders, which can go up to 14%-25% in terms of a personal loan.
- Tenure period: The tenure period on a used car loan can range up to 5years offered by leading banks and finance lenders in India. Eventually, the age and condition of the determined used car might also influence the tenure period for the loan. The old the car is, the lesser your tenure will be. However, nobody should pick a send-hand car aged than 5yeras since lenders do not approve finance for such a vehicle.
- CIBIL or Credit score: There is a possibility of being denied a pre-owned car loan in the event of a poor or low CIBIL score. Whether it is a personal loan, home loan, or car loan, credit score plays a crucial role in the loan approval process and help lenders set your interest rates. A low credit score can cost you higher interest rates, vice versa.
How can I finance for second-hand car?
While getting a loan for your pre-owned four-wheeler, you need to consider the nature of basic requirements for the finance. However, the following are the general steps that will assist you to obtain your pre-owned car finance.
- Determine your requirements: Once you decide the loan amount, you need to set up loan terms and monthly instalments depending on your monthly wages and other associated calculations.
- Pick the model and type of the second-hand car: Secondly, you have to determine the second-hand car model and type that suits your demands yet fits within your budget. However, several lending institutions and banks take into consideration of the car’s age and kind, including the model to approve the loan. Hence, selecting a relatively new model will help you get the pre-used car loan effortlessly.
- Compare the available options: There are a number of private and government financing institutions and banks that offer second-hand car loans in India. By comparing their finance schemes, loan deals and facilities, you can settle for the best one.
- Fix your loan amount: Once you have finalized the components mentioned above, you should calculate the amount you need to pay off. If you cannot repay the higher sum, you should opt for a smaller value with easy instalments. You can use an EMI loan calculator to ease your job and get an idea of the prospect loan amount you require to finance.
- Perform document verification: All moneylending companies demand some authorization proof to ensure your authenticity and income proof. However, the demand for each paper may vary from lender to lender.
On the current economic aspects, the finance for second hand car is an ideal option for mediocre families. These days, people seek security yet face a lack of funding to purchase a vehicle. However, before you apply for the loan, make sure you meet all necessary criteria demanded of the pre-used car loan.