Used Car Loan

A Used Car Loan is a financial tool that allows you to purchase a pre-owned vehicle by making regular payments over time. It’s a convenient way to own a car without paying the full upfront cost. With a used car loan, you can spread the cost of the vehicle over several months or years, making it more affordable.

A good second-hand car can be bought with the help of a used car loan. Used car loans are provided at attractive interest rates and come with a repayment tenure of up to 7 years. Certain lenders provide loans of up to 100% of the car’s value. Most banks and NBFCs provide used car loans. Self-employed individuals and salaried employees can avail themselves of a used car loan.

Used Car Loans Features and Benefits :

The main benefits and features of a used car loan are mentioned below:

  1. The loan amount that is being availed may be less when compared to a new car loan. Therefore, your monthly EMIs will be low.
  2. Long repayment tenure.
  3. Up to 100% financing is provided by certain banks and NBFCs.
  4. The process to apply for the loan is simple and can be completed online.
  5. The insurance costs and depreciation rates are lower when compared to a new car.
  6. Minimum paperwork needs to be submitted.
  7. Certain banks and NBFCs offer flexible repayment terms.

Things to Keep in Mind While Applying for a Used Car Loan

Given below are some of the important points that must be considered when availing a used car loan:

  1. The interest rates for a used car loan are higher when compared to a new car loan.
  2. Certain NBFCs and banks do not provide a loan if the car is more than 3 years old.
  3. The insurance cost will not be covered in the loan amount.

Used Car Loan Eligibility and Documents :

Read on to know the criteria required to apply for our Used Car Loan.

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Eligibility Criteria for Used Car Loans :

The eligibility criteria that must be met for salaried employees and self-employed individuals will vary and are mentioned below:

Salaried Employees

  1. Age Limit: 21-65 years
  2. Income: At least Rs.15,000 per month
  3. Income Status: You must be working in the current organisation for at least a year

Self-employed Individuals

  1. Age Limit: 25-65 years
  2. Income: Must make a profit of at least Rs.1.5 lakh in a year
  3. Income Status: Must be in the same line of business for at least 3 years

Documents Required for Used Car Loans :

The list of documents that must be submitted when applying for a used car loan is mentioned below:

  1. Application form
  2. Passport-size photographs
  3. Car valuation report
  4. Identity Proof: Any of the below-mentioned documents can be submitted as proof of identity : Aadhaar Card, Passport, Driving License, Voter’s ID, PAN Card
  5. Address Proof: Any of the below-mentioned documents can be submitted as proof of address: Voter’s ID, LIC Policy, Electricity Bill, Aadhaar Card, Driving License, Ration Card, Passport
  6. Income Proof: The below-mentioned documents must be submitted as proof of income: Profit and loss account, Balance sheet, Audit sheet, Form 16, Salary slip, Bank statements

Important Things to do When Buying a Used Car :

Some of the important things that you must do when you buy a used car are mentioned below:

  1. Check the Car: Ensure that the car is checked thoroughly. You can take the help of a mechanic to check the car.  If there are any issues with the car you can negotiate the price. Drive the car where the traffic is less, to check for any vibrations.                                                                                                                          
  2. Check the Papers Thoroughly: It is vital that the insurance papers and the registration certificate are checked thoroughly. Check if the engine number and chassis number on the car match the ones mentioned on the copies. It is also important to check if the car has had any accidents.
  3. Vehicle History: It is vital that the vehicle history is checked before buying it. Various details of the car can be found online. Checking the vehicle history helps to see if the car has had any accidents and if there have been any service issues.
  4. Transfer the Registration Certificate: Once the car has been purchased, ensure the Registration Certificate (RC) is transferred to your name. If the car is registered in another state, a NOC is required. If the car has been purchased on a loan by the previous owner, a NOC is required as well.
  5. Transfer the Insurance: The car insurance policy must be transferred to your name immediately. The insurance policy is void in case it is in the name of the previous owner even if the RC is in your name.
  6. Service the Car: It is vital that the car is serviced before you start using it. In case of any rust, it must be fixed.  Change the fluids and clean up the car before it is used for the first time.
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