Used car loans are highly useful for those who don’t wish to buy a new car and are willing to seek finance for something more within a budget. Loans for used cars come with various choices that you need to make when it comes to buying a car. Pre-owned car loan interest rates are also comparatively low when compared to other loans. It is said that new car sales have reduced a lot and the demand for used cars is booming in India.
What is a used car loan?
To make it simpler, these loans are offered by a financial institution to buy a used car. The amount varies depending on the bank, the age, and the health of the car as well. The total amount of the loan can range anywhere between 1 to 7 years. Pre-owned car loan interest rate also depends on your car and your credit score. If your credit score is more, then the interest will be higher while if the score is low then the interest rate would be higher.
What are the benefits?
Getting a loan on used cars is just like opting for a new car loan. It is super simple and hassle-free, and the restrictions are also minimal for these loans. Anyone can get a car loan, but they must have a regular source of income to repay it. These loans can be secured for a minimum of 1 to 7 years and their benefits are.
- Hassle-free buying process:- When you get a loan on used cars, you don’t have to worry about down payments, interest rates, etc. Also, you will be able to aim more on car deals as well.
- Quick Disbursement:- If you have a pre – approved loan already, then you can buy the car whenever you want to. Since it’s approved already, you don’t have to wait for the documentation and verification process.
- Wide range of deals:- Availing of these loans gives you the freedom to visit a wide range of auto dealers which means you are allowed to handpick the deal you want to find the right financing.
- Allows you to know the interest rate:- Getting a pre-approved loan enables you to know the EMIs and cost of the loan in advance. Knowing the right interest rate helps you to find out the actual amount you need to pay. This way you know the right budget before finalizing the car.
- Minimal paperwork:- After approval, you don’t have to submit a lot of qualification papers and the loan process will also be smoother.
For loan verification and approval, you might have to submit specific documents some of these are listed below;
- ID proof
- Age proof
- Income proof
- Bank statements
- Passport size photo
- Proof of residence
How to Apply?
You need to visit your nearest branch office where you to get the loan on used cars
- Fill in the application form
- Submit all the needed documents and check for the eligibility
- Choose the lender based on the processing fee and interest rates.
- Things to do when buying a used car
- When buying a used car, always remember to check for the papers thoroughly
- Check the car and the history
- Ensure that the RC or registration certification is transferred to the new buyers’ name
- Check whether the car insurance policy is transferred to your name.
Pre-owned car loan interest rate
Applying for a loan on used cars depends on your eligibility, you can also get qualified for more competitive rates if your salary is steady and high. Also, your CIBIL plays a vital role in buying a used car loan. The only drawback of buying a used car loan is that it can be higher than new cars and it ranges between 10.50% and 18% per annum.
How to reduce used car loans?
A wide range of factors affect the interest rates and knowing these can be helpful.
- Make a high down payment:- There are lenders who provide low-interest rates when you make a more down payment. Since the principal amount is minimal, the EMI will be less. You can also save a lot upfront.
- Choose shorter repayment tenure:- Another important factor to consider is to choose a shorter repayment tenure. Longer ones come with lower EMIs but with more interest charges.
You can get the best deal when you do a bit of research and find the right loan on used cars at the best possible price. When applying for these loans, make sure to read the pre-owned car loan interest rate carefully. Don’t fall for a high-interest rate as it might be a burden for you. So before you apply for a loan on used cars make sure to follow all the necessary steps to make sure that the charges are low as possible.