Buying your car is one of the biggest decisions you can take in your life. It brings with it a sense of identity and safety. Besides that, you are one step closer to freedom from the public conveyance. With the increasing prices of vehicles and the financial instability induced by the COVID-19, getting a used car makes more sense. A used car enables you to buy your dream car without having to spend a lot of money.
Even buying a second-hand car can, sometimes, be a burden on your finances, as the prices vary across brands and models. However, you can easily get a used car loan to buy your favorite car without putting any burden on your savings. With affordable interest rates, you can choose to pay the loan amount over a flexible loan tenure.
Used car loan
A used car loan enables you to buy your dream car without hurting your finances. You can get up to 80% to 90% of the vehicle’s value as a loan, and make repayments within 60 months after approval. The used car loan interest rate starts from as low as 8.5%. However, the interest rate depends on factors like your income, credit score, financial obligations, etc. You can also utilize a used car loan EMI calculator to determine your loan affordability and choose an EMI that fits your monthly budget.
Here are the benefits of applying for a used car loan:
- Maximum loan amount
The loan amount that you can get depends on the insured declared value of the vehicle. Some lenders offer up to 90% of your used car’s value as a loan, which means that you will have to pay the remaining amount as a down payment. Depending on the brand and model of the vehicle, a second-hand car can cost a significant amount of money. A higher value of a car translates into a higher loan amount.
The loan amount depends on your eligibility factors, such as age, income, credit history, condition of the car, current financial obligations, relationship with the lender, etc. Also, to know if you can afford the loan, you can use a used car loan EMI calculator before applying for a loan.
- Easy process
With the advent of the internet, your days of standing in long queues to apply for a used car loan are long gone. You no more have to visit a physical location, wait in queues, and follow up a lengthy and hectic application procedure to get a loan. Whether you want to compare rates, fill in your application form, upload documents, check your credit score, or determine a suitable EMI, you can do so with just a few clicks on your computer. If everything is in proper order, the sanctioned loan amount will be disbursed to your registered bank account within hours of approval.
- Flexible repayment terms
Another advantage of applying for a used car loan is that you can choose the loan amount and the repayment tenure based on your needs and preferences. Nonetheless, it would be wise to assess your needs and determine your affordability before applying for a used car loan. To understand how much you can afford to pay as EMIs, you can use a used car loan EMI calculator available on your lender’s website.
You can also decide the terms of your repayments. It enables you to choose a loan amount you can repay via post-dated cheques, online payment, or Electronic Clearance Services (ECS).
- Minimum documentation
Unlike other loans, it does not require you to submit a lot of documents. The documents required to apply for a used car loan are a bare minimum. Here are the documents that are common across all use car loan platforms:
Identification and address proof: PAN Card, Aadhaar Card, Passport, and Driving License (Any one of them)
Income proof: Bank statement, salary slips, Income tax returns, or Form 16
The best thing about an auto loan is that you do not need to pledge your assets with considerable collateral. It is a collateral-free loan available for both salaried and self-employed individuals. But, you will have to convince your lender that you have a stable income and have maintained a healthy credit score. Your income and credit score are the two primary factors considered to determine your creditworthiness.
Getting a used car loan is the best way to own your dream car without touching your savings or investments. Before applying for a loan, assess your needs and then choose a loan amount that you can afford to pay its interest without fail.