Tips to Make the Used-car Loan Application Process Easy

Most budget restrictions affect our aspirations, whether it is travelling, buying a home or purchasing a car. But, the increased popularity of less expensive and good-condition second-hand cars is offering a respite to people wanting to buy a car of their own. Now, are you wondering if you will be able to finance a used car? The answer is yes, you can. Want to know how? Here’s a quick guide to understanding the used-car loan process.

How to Get a Second-hand Car Loan?
• Choose a Car
Choose your car from a wide range of options available with reputable dealers. You can also buy a car from a friend or search for one online. However, there are a few things to keep in mind when purchasing a used car. Checking documents, checking liens, checking the car's age and a few other considerations are among them.

• Fill the Loan Application Form
Once you have finalised your car, the next step involves applying for a loan. Nowadays, lenders offer both used-car online application and offline facilities for used-car loan application. All you have to do is check your eligibility, scan the required documents and click on the apply button. The online application process takes only a few minutes. You can also check your used-car loan application status online.

• Finalise the Loan Amount
Your loan application needs the finalisation of your loan amount. Discuss with your lender the details of your loan amount. Also, check for various types of fees associated with your used-car loan. Before finalising your loan, you must also consider the EMI and loan tenure that is best suited for you. You can also negotiate on the used-car loan interest rate and the loan amount if you have strong creditworthiness.

• Submit Documents 
Once you have finalised your loan amount, the last step involves submitting the documents. After the lender verifies the documents and approves your loan, you can drive your used car home.

Also Read: Checklist For Your Pre-owned Car Loan Application

Documents Required for a Used-car Loan
• For Salaried Employees 

• Photo Identity Proof: Driving Licence/ Copy of Voter’s ID/ PAN Card / Aadhaar Card/ Passport
• Income Proof: Copy of your salary slip or salary account statement for the last three months.
• Proof of Residence: Passport/ Copy of Ration Card/ Electricity Bill
• Copy of Vehicle Registration Certificate
• Copy of phone or telephone bill

• For Self-employed Individuals

• Photo Identity Proof: Aadhaar Card/Driving License/PAN Card/Passport/Voter’s ID
• Copy of your signature with signature proof
• Address Proof: Account Statements/ Copy of Utility Bill/ Property Registration documents/ Voter's ID/ Property Tax Receipt
• Income Proof: Audited Balance Sheet, copy of Income Tax Returns (ITR), Profit and Loss Statements and last three months account statements.
• Copy of mobile or telephone bill

 
Eligibility for Availing of a Used-car Loan

Before applying for a used-car loan, you must consider the used-car eligibility check.

• Applicant's Age: The age requirement for a used-car loan can range from anywhere between 21 years to 65 years. However, the age factor varies from one lender to the next.

• Income: An individual must have a steady source of income. The minimum salary limit for a used-car loan is Rs 20,000 per month for salaried employees and Rs 20,000 per month for business owners or self-employed individuals.

• Work Experience: Financial institutions ask for a minimum of one year of work experience for salaried individuals and three years in business for business owners.
 
Also Read: A Handy Checklist Of Documents For Used Car Loan Application

Features of a Loan against Used Car
 
• Minimum Paperwork: Applying for a used-car loan is not as difficult as you would imagine. In comparison to other loan types, it needs very little paperwork.

• High Loan Amount: This loan kind offers a large borrowing amount. The loan offered for a second-hand car varies from 60% to 80% of the car's on-road price. Also, the loans can be as high as up to Rs 50 lakhs. The loan amount is completely dependent upon various factors.

• Flexibility: A used-car loan comes with flexibility. The loan tenure, EMI and loan sum can all be according to the customer's choice. Depending on your preferences, you can also choose a payment method from a range of options. Some lenders offer repayment tenure of up to 7 years.

• Low-interest Rate: As compared to most of the other loan forms, the interest rate of used-car loans is usually low.

• Low-credit Score: As the car is hypothecated with the lender, in the event of a payment default, the lender can sell the vehicle at auction. As such, borrowers with low credit history can also apply for this loan.