When it comes to financing the purchase of used cars, many Indian consumers tend to take out a personal loan or fund the payment themselves. While the former is a more expensive option, which is best avoided, the latter is a good option as long as it does not destabilize your financial condition.
If you want to buy a pre-owned car, taking a used-car loan to fund your purchase is a good idea. Compared to a personal loan, used-car loans are specially designed to meet the needs of second-hand car buyers. It offers multiple benefits to users, such as:
Higher loan to value ratio
Lower interest rate compared to personal loans
As the car is hypothecated to the lender, buyers with low credit score can also get the loan
However, there is one condition attached to used-car loans. The loan duration is dependent on the time of the first purchase of the car. Any car loan has a maximum duration of 8 years from the date of the first purchase. So, if you buy a 3-year old car, then your used car loan duration will be 5 years.
Now let us look at how to apply for a used car loan.
Do your research for the right lender
It might be easy to just land at a dealership and find a finance deal for your used-car but then you might end up getting a bad deal. It would be a better idea to get a pre-approval for your loan from other financial institutions so that you have better bargaining power. While comparing the different financing offers, make sure you do not focus only on the monthly payment of a loan offer. Make sure you narrow down on a lender who is reputable and is offering you interest rates that work for you. You are much likely to get a better deal if you are willing to offer a down payment. This will lower your monthly installments and also shorten the loan tenure.
Hero FinCorp, one of the trustable leading used-car financing company in India, offers numerous benefits to its customers. Some of the features of its used-car loan products are:
Loans are available from Rs 50,000 to Rs 50 lakh, for cars of all brands
Finances both certified and non-certified types of used cars of any make and model
Offers loan to value ratio of up to 175% of the second-hand car loan
Up to 5 years repayment period
Provides competitive interest rate
Easy documentation and flexible term
Check Eligibility Requirements
Checking all eligibility requirements is a crucial step before applying for any loan. This will help you to know whether you are qualified for applying for the loan and your chances of getting the loan.
If you apply for the loan that you do not qualify for, it will ultimately get rejected and adversely impact your credit score.
The eligibility criteria for applying for a used car loan with Hero FinCorp are:
Must be an Indian resident with stability of 1 year
Age should be 18+ years
Salaried class customers should be employed for a minimum of 1 year
Self-employed or business owners should be in business for a minimum 1 year
Check Documents Required
Documents create evidence for a transaction between two parties. And, for financial institutions, it plays a key role in deciding whether to approve a loan application or not.
Therefore, keeping all documents ready and error-free helps in a quick approval of the loan. Further, enquire about any additional charges like processing fees, insurance charges, pre-payment charges, etc before signing the loan documents.
Documents required when applying for a used car loan with Hero FinCorp:
Identity & address proofs for KYC verification
Valid income proofs/Bank Statement
Passport Size Photograph
Apply for the Loan
With Hero FinCorp, which follows an online-based application process, applying for a used-car loan is very easy.
You need to fill out an online form available under the "Apply Now" section of the website, with your basic details and select "Used-Car loans" in the product field. Following successful submission, a company representative will contact you to help you with the rest of the process.
Hero FinCorp offers doorstep service, which helps you to get finance without even visiting the office.