Buying a new car can create a dent in your financial reserves, considering the various charges and taxes that get added up. The depreciation on new cars is very high. Today, many Indians are choosing to buy second-hand cars. There are several factors that you need to consider before you choose the appropriate second-hand car loan for you. It is important to understand the various financial implications of the loan.
Considering the various charges attached to a new car and the rate of depreciation, it makes financial sense to opt for a used car. Second-hand car loans are easily accessible in India. Many car buyers conveniently go with the finance scheme offered by their used car dealer. As a result, they may miss out on better deals that are available in the market. It would be prudent to opt for a Second Hand Car Loan after careful consideration. There are several factors to be kept in mind before you apply for a second-hand car loan.
Familiarise yourself with the loan process
It is important for you to study the entire application process and the documentation requirements. You need to check the repayment, prepayment and foreclosure processes. You need to look for penalties attached to foreclosure of your loan.
Today, most banks and NBFCs permit online submission of applications. A personal loan for second-hand vehicle offers you a much simpler application process.
You need to find out what percentage of the value of the car will be financed by the used car loan provider. The loan amount in a used car loan is restricted to 70-75% of the value of the car. In case you are looking for zero down payment, you can apply for a personal loan to finance your purchase.
The eligibility for a used car loan depends upon your income and stability of employment. It is also determined by the age of the car that you propose to buy. The insurance documents of the car should be in order and the title to the car should be in the name of the proposed seller.
Since a personal loan is an unsecured loan, eligibility for the loan depends largely on your credit score.
Before you apply for a loan for a used car, it is critical to do your research regarding the interest rates offered by various loan providers. A personal loan can sometimes offer you a lower interest rate. It is in the buyer’s interest to scout around for the best deal.
These days, a lot of information is available online, on the websites of banks and NBFCs. The EMI calculator will help you to find out the amount of EMI that you need to pay at various interest rates.
When you apply for a second-hand car loan, you need to produce documents such as the RC book, car valuation report and insurance documents, in addition to your KYC documents and income proof. For a personal loan, it will suffice to produce your KYC documents and income proof. In order to eliminate any delay in processing the application, the required documents should be kept ready.
EMI payment procedure
Used car loan EMIs are payable either as post-dated cheques or automatically debited from your account using ECS. You must choose a payment method that is convenient for you.
Before you decide on the most suitable second-hand car loan for you, you need to find out the late payment charges and default penalties attached to your loan.