Cars are a bare necessity these days as you need to commute from one place to another for work or personal reasons. These cars are expensive and buying them in earlier times was a task. But now with the advent in technology and financial capital, buying a new or used car on finance is a cake walk. You need not worry about anything at all. You just need to think and plan about buying a new car and find a good model from the many available manufacturers and used car dealers. Once you have zeroed down on your dream car or the one that fits into your budget, you can look at the pricing and the deals being offered by the companies and even banks and financial institutions. You should know the down payment amount for such a new or used car loan. This down payment is the difference between the cost of the car and the loan amount sanctioned by the bank or financial institution. Usually individuals have a fixed budget for applying a used car loan as the rest of it is already arranged by them.
The interest rates for a refinanced car is more than the new car. This interest rate is the income for the lenders and can change as per their norms and principles. But this does not mean that it cannot be bargained. You should have the skills to do so and get them down to your budget. New and used car loans are very competitive in the financial market. There is no way that these lenders would leave any client who wishes to apply for a car loan. They would do almost anything to turn the lead into a sale. Therefore, play your best cards to get the best refinance interest rates.
The general interest rate on a used car loan is at 13.5% average as per market trends. But it may fluctuate depending on the condition of the car. This can be influenced by the age of car, type and make of car, pay back ability of loan borrower, credit score, work experience and age of the borrower and similar other factors. Once all this is factored, the interest rate is finalized.
Your credit history and ratings play an important role in making you get an approval for your used car loan. This credit rating is handled by CIBIL agency who has the records of all the individual who have anytime applied for a loan and are repaying it with easy EMIs. There is a benchmark set by the agency for you to get a loan approved. If this benchmark is not satisfied, then you would not be able to get a loan. The criteria to get this benchmark working for you, the payments for any dues should be well within time. If there is any default, then you would fall under the low ratings. However, there are ways for you to get these scores working for you. These tactics are explained by the bank and financial institution representatives well. So, if you have some issues with your ratings, they would help you revive it and then apply for a used car loan.
Before you start your used car loan application process, you should know your expected EMI for the tenure you choose. It is difficult to gage an EMI unless you check the same thorough your lender. But with the advent in technology, this process can be done by you with ease, even before you approach the lender. All you need to do is visit our used car loan EMI calculator. They would have all the details required for such calculations. You just need your inputs that prefer you. These inputs are basic details such as the loan amount, rate of interest and the tenure that you prefer to repay the loan for. Once you input all such details, an EMI would be generated by the calculations that the lenders work upon. This can be compared with other lenders that you wish to target to apply for a used car loan. Remember the EMI provided will be a rough estimate depending upon the inputs provided by you.
The loan amount is decided by the bank and financial institution. But on a regular basis, this loan amount is 90% of the car value. In some special cases, this may go up to 100% depending on the background of the loan borrower. It can also be prevalent on the relationship of the borrower with the lender.
Used car loan tenure is for 5 years on the higher side. This is decided by the age of the car which means that the manufacturing date plays the game changer here. Usually a car that is nine years old cannot get a used car loan. So, ensure that the car you plan to buy, and finance should be lesser than nine years. The number of years pending in the 9th year of the car would be the tenure you would get as a repayment period. For instance, the age of the car when you plan to buy it is 2 years, then the maximum tenure you can get is 7 years only your application is a special case, else it would be shifted to 5 years. In some cases, you can get a 7-year loan repayment schedule as well. However, it is on the sole discretion of the lender.
The eligibility of the used car loan also needs to be checked so that you do not get a shock that a loan cannot be offered to you. This eligibility is decided by the lender based upon a few parameters. The basic criteria for applying for a used car loan is the income. If you are a salaried individual, then your income should be a minimum of 2.5 lakhs per annum and for a self-employed individual it should be 2 lakhs per annum. You can check your eligibility and then apply for a used car if you fit the criteria.
Used car loans are a boon to the society as they help individuals who do not wish to spend much on a car but still would like to buy one. This would give them a boost in dreaming about the car that they like and apply for a loan to reduce the pressure on the borrower. Let us look at a few benefits that you can avail as a used car loan borrower.
As you are applying for a used car loan, there are many benefits and offers that can be used while you decide the terms and conditions. A flexible repayment schedule can be asked for if you have a tight hand right now but would have the liberty to pay more later. This can be designed in a way where for a set period you would pay a fixed sum and later for the remaining period the amount can be increased as agreed. This can also be swapped the other way around as well. So, ask for a flexible repayment schedule from your lender today.
You can get lucky if your lender is offering you a pre-approved loan. This can happen with many multinational banks and financial institutions who wish to give pre-owned car loans a hike. Your bank account and its transactions would decide such an offer. So, be vigilant and apply for such an offer when you come across it. Also, if you wish to buy a used car and need to apply for a loan, you should first contact your personal banker or look for finance options online so that such offers can be used to the core.
Documentation is one part of the loan application. You should know what documents are required when you apply for a used car loan. This would help you to keep such documentation ready and apply for a used car loan with ease. This documentation takes a whole lot of time as it needs to be arranged. The general documentation that you may expect in this case is the photo id proof, address proof and income statements along with bank statements. In some cases, if there is a requirement the lender may ask you for the income tax returns to make the documentation stronger so that your loan can be approved with ease.
There is an insurance cover for the liability amount. This is to keep the lender secured in case of any unavoidable circumstances and the vehicle being damaged. The main reason to do so is because there is no collateral asked from the borrower in such a used car loan. The collateral is the vehicle only. This insurance cover premium is also paid by the borrower along with the EMI. It is a way to stay secured in case if there is any loss from the borrower as well. All such options help the borrower and the lender to keep their share in the loan secured.
There is a loan application process which is followed by the lenders be it banks or financial institutions. These processes are the same on most cases.
All such procedures help to make the used car loan application a smooth process and hassle free. You can buy any car that fits into the criteria and has a good record. There is a customer care center that would help you in every step and ensure that your loan application process is a cake walk. Also, you can keep a track of your loan and its repayments so that you know there is no unwanted activity or transactions going on in the account. With the online access, you can continuously watch the in and around of your account so that things become smooth. You should know which company, bank or financial institution should be tapped for your used car loan. It is a competitive market and you can get very good deals only if you look around for it. So, be smart enough and apply for a used car loan as soon as possible to get your car home. You can also plan to pre-close your used car loan so that you can save some money in interest rate. This would be possible for you only if there is an option available with the lender. You should check with the lender how much would be the penalty or charge that you would have to pay. This is a percent of the outstanding principle amount and can be a huge one. So, make sure all the terms and conditions are clear even before you think about it. There are many lenders who do not charge a penalty on pre-closure of the loan. You need to identify all your options before you freeze on any one.