After taking a home, getting a car is the second biggest decision you can take in your life. It brings with it a sense of achievement, and most importantly, a sense of safety given the current pandemic. Instead of using public transports, it is always better to own a car and conveniently commute to work.
However, with the current financial situation in India, it would not be wise to use your savings to get a new car when you have the option to go for a second-hand car with the same model and brand. The best part about a second-hand car is that you can save a significant sum of money and yet own your dream car.
Second-hand car loan:
You can get a second-hand car loan without touching your savings or putting a financial burden on your monthly budget. It is a better option to manage your finances when you do not have other means. With affordable interest rates and flexible loan tenure, you can repay your loan amount within the stipulated EMIs. However, it is worth noting that the used car loan rates depend on factors, such as income, credit history, current financial obligations, etc.
Here are the top four things to know before applying for a second-hand car finance in India:
The factors that determine your loan amount depending on factors, such as the vehicle’s market value, your income, repayment capacity, down payment, etc. You may get offers up to 80% of the vehicle’s market value as a loan. It means that you will have to pay the remaining 20% of the second-hand car from your pocket.
So, your loan amount mainly depends on your second-hand car’s value and its features. For instance, a SWIFT VXI that has run for 10,000 km may cost you between Rs. 5 lakhs to Rs. 5.5 lakhs, whereas a TATA Indicate that has run for up to 40,000 km can cost you around Rs. 250,000. So, before applying for a second-hand car, check your car’s value in the market and determine your eligibility.
Know your eligibility
Before applying for a second-hand loan, it is advisable to check your lender’s eligibility criteria. If you do not meet the criteria, you will struggle to even get loan approval, let alone getting lower used car loan rates. The eligibility criteria for a second-hand car loan differ from lender to lender. However, here are the requirements that are common across all platforms:
- You must be an Indian citizen currently living in India.
- You must be at least 21 years old at the time of application and 65 years old at the end of the repayment tenure.
- You must be a salaried employee of an organization or you must be a self-employed professional.
- As a salaried employee, you must earn a minimum net salary depending on your lender’s policy.
- As a self-employed, you must show a minimum net profit depending on your lender’s policy.
The best part about a second-hand car loan is that there is minimum documentation involved. Almost anyone with a stable income can apply for a loan and avail of the best-used car loan rates. Here are the documents you need to furnish while applying for a second-hand car loan:
- Identification proof: Aadhaar Card, PAN Card, Driving License, or Passport
- Address proof: Aadhar Card, PAN Card, Voters ID Card, Utility Bill, Driving License, or Ration Card.
- Age proof: Aadhaar Card, Driving License, or Passport
- Income proof: Bank statement, Salary slips, or ITR
- Asset proof: Building house tax receipts
- A passport-sized photo.
Equated Monthly Instalments (EMIs)
Your EMI is the most crucial factor in your second-hand car loan. It directly impacts your monthly budget. Before applying for a loan, your lender allows you to use a second-hand loan EMI calculator to determine your affordability. You have control over how much your monthly installments should be. If you have a consistent income, consider opting for a fixed EMI, but if you are sure that your income will increase at a regular interval, choose a structured EMI to better manage your finances.
To determine your EMI affordability, you can use a second-hand car loan EMI calculator. It enables you to figure out your EMI amount based on the loan amount, loan tenure, and used car loan rate. You can make changes in their value until you figure out a suitable EMI for yourself.
If you are applying for a second-hand car loan, it would be wise to assess your needs and affordability beforehand. This way, you can secure a loan and also get lower used car loan rates.