All Your Used Car Loan Query Answered

Owning a car has long been a source of pride and a sign of a lavish lifestyle. But, in recent years, it has become necessary. Several financial institutions have stepped up and begun to offer used car loans to address this need. 

Although this loan is easily accessible, individuals are still confused and have several questions. The post will try to address all your queries and concerns.

Q.1. What is a used car loan?

Simply described, pre-owned car finance is a fund obtained from a lending institution to purchase a second-hand car. The lender determines the loan value based on two primary factors: the condition of the car you wish to acquire and the price at which you decide to buy it. You can use this loan to purchase any type of car. The lender approves a loan for almost any make and model, whether it is a hatchback, sedan, SUV, or premium XUV.

Q.2. What is the minimum eligibility criteria for a second-hand car loan?

A pre-owned car loan is now available from practically every financial institution. When you look at the eligibility criteria closely, you will see that there is a slight variation between the qualifying conditions of different lenders. However, to give you a better idea, let’s review the qualifying requirements of one of the most reputable financial institutions.

• Citizenship: 

Only Indian citizens can apply for this loan.

• Age:

You must be over the age of 18 to apply for this loan. 

• Occupation:

A used car loan is available to both salaried and business owners. 

• Experience:

A minimum of one year of work experience is necessary regardless of your occupation. 

Q.3. What are the factors that determine the second-hand car loan interest rate? 

Unlike other loans, second-hand car loan interest rates are reliant upon a few additional factors. Here is the list of all the factors that influence your used car loan rate.

• Your age and monthly income 
• Your existing debts and debt-to-income ratio
• Your credit history
• Conditions of the car
• Documents related to your car
• Your relationship with the lender
• Car’s resale value and current price
• The amount you are willing to pay towards the down payment.

The lender evaluates all the above parameters, and based on that, they decide on the loan amount and interest rate. 

Q.4. Should I purchase a new car or an old car?

The answer to this question is entirely dependent on your financial situation. In case you are on a tight budget and can obtain everything you need for less money than a new car can, don’t hesitate to choose an older vehicle. Some of the benefits of buying an older car are listed below. 

• The funds required to purchase a used car are far less than those required to purchase a new car.

• You won’t have to pay for registration or road tax. It’s because these costs are incurred when you buy a new car from a showroom.

• You don’t have to be concerned about depreciation. This is because cars lose the majority of their value in the first few years.

• Insurance is substantially less expensive than buying a new car. This is because the insurance premium is based on the car’s current market value, or better say, its Insured Declared Value (IDV).

• It provides you with peace of mind because you don’t have to be concerned about dents or scratches.

Q.5. How should I calculate my monthly obligations beforehand?

You should use a used auto loan EMI calculator to figure out your EMI. A calculator is an online tool that you can find on any used car loan lender’s website. This tool can be used from the comfort of your own home and is free. Here are the steps that you must follow to arrive at the EMI.

• Go to the website of a used car lender.
• Navigate to the second-hand car loan page.
• There you will find the calculator that requires three factors to be entered: loan amount, interest rate, and loan tenure.
• On the first slider, enter the desired used car loan amount.
• In the next slider, input tentative interest rate.
• In the last slider, enter the loan tenure
• Click on the submit icon.
• Your laptop screen will display the entire amortisation schedule.

Q.6. What is the maximum amount for which I can take a used car loan?

You can apply for a pre-owned car loan for the value ranging between Rs. 50,000 and Rs. 50,00,000. The loan amount offered under this loan ensures that you can easily purchase your desired car, whether it is a budget vehicle or a luxury vehicle.

The maximum loan amount available under this loan is determined by several factors. Some of the important considerations include the age and condition of your car, your monthly income and job stability, and your previous or current loan repayment pattern.

Simply put, if your profile gives the lender the impression that you pose little or no credit risk, you will be approved for the loan amount requested.

Q.7. How to get an affordable second-hand car loan interest rate?

Getting used car finance at a low-interest rate is the most frequent query that people search on the Internet. Here are some of the tips that can help you with this.

• Make sure you don’t have many debts and that you don’t have any default loans or unpaid EMIs on your credit report.

• Check all of the documents pertaining to the car. Ensure that the engine and chassis numbers on the car match those on the RC. Check to see if the road tax has been paid. If there is a discrepancy or if any of the required documents are missing, the lender will reject your application right away.

• Purchase a vehicle that is free of mechanical flaws.

To Conclude:

In this article, we have attempted to answer the majority of your questions. It will surely assist you in obtaining an affordable second-hand car loan interest rate while also making the loan application process easier. If you have any further questions, please ask them in the comments section.