Pre-owned cars have gained wide popularity in the last few years, especially after the pandemic. This is because buying a used car can be more practical in many situations than shelling out a huge sum by buying a new car. Besides, many reputed lenders today offer attractive used car loan interest rates making pre-owned cars the first choice for many potential car buyers.
You can use the following steps to apply for a used car loan easily.
Select the Car Dealer
You can purchase a car directly from the current car owner or a used car dealer. However, if you buy a used car directly from an owner, then you must do the background check, paperwork, and other formalities by yourself. On the other hand, purchasing a second-hand car from a certified pre-owned car dealer saves you the hassles of doing all the formalities yourself.
Moreover, an authorised reseller can also help you avail of second-hand car finance from a reputed lender. Many lenders have tie-ups with authorised car dealerships and can help you get a discount on the used car loan interest rates.
Plan an Appropriate Budget
The price of a used car can vary depending on the model and type. For instance, a luxury car can cost much higher than a utility car. So, plan your budget as per your financial standings. Identify the amount you can spend to buy a used car to avoid overspending or stretching your finances.
Today, many reputed lenders offer attractive used car loan interest rates with flexible loan repayment tenure. So, consider taking a used car loan with good EMI options. Manageable EMIs can help you plan an effective monthly budget without straining your finances. You can also use the free used car loan EMI calculator at the lender’s website to find out how much EMI you’ll be paying for a second-hand car finance loan.
Age and General Condition of the Used Car
It’s both impractical and unsafe to buy a car which is not in good shape. For instance, if a used car has recurring issues, then the periodic repair and maintenance cost may negate the benefit of buying it at a low price. Similarly, a very old car or a car that has been extensively used may have already run out of its operational life. Purchasing such a car might not be economical.
Therefore, assess the age and state of the used car carefully. To begin with, used car loan providers consider a car’s age before approving a loan. So, if you want to apply for a used car loan, then refrain from buying a car that is more than 7-8 years old.
Next, check the car’s engine, gearbox, and other machinery. You can take the help of a skilled and trusted mechanic to inspect your potential car. Make an approximate estimate of the amount to be spent on its repair or make some upgrades.
Select the Right Lender
Once you have decided on the car, find the right second-hand car finance provider who can offer you a used car loan at favourable terms. Visit the official website of the used car loan providers to see what they offer. You can check certain parameters like the used car loan rates, the loan amount, loan repayment tenure, processing fees, etc. Moreover, check whether they allow you to apply for a used car loan online, the most hassle-free way to secure a used car loan.
Finally, check whether you fit the eligibility criteria before you apply for a used car loan. Depending on whether the borrower is a salaried individual or a self-employed professional, a lender might have different eligibility criteria or used car loan rates. The lender typically assesses the borrower’s age, income, and work stability.
Submit Loan Documents
Once you are satisfied with the used car loan interest rates and the loan amount, you can submit the necessary documents for loan approval.
The general documents required in a used car loan are as follows.
- Photo Identity Proof: Aadhaar card/ PAN card/ Driving license/ Passport
- Address Proof: Latest electricity bill/ Property tax receipt/ Ration card
- Income Proof: Bank statements of last three months/ Copy of income tax returns/ Audited balance sheet and profit and loss statements for self-employed persons.
- Vehicle Details: Copy of vehicle registration certificate, insurance papers, etc.
With lenders like Tata Capital offering used car loans for up to 95% of the car value, it’s easier than ever to finance your short-listed used car. So, apply and get home your desired pre-owned car without straining your budget.