How to Get a Used Car Loan?

The majority of lenders in India offer financing options for the purchase of pre-owned vehicles, particularly used cars. The selection of a second-hand car, including its age and model, significantly influences the approval process for obtaining auto financing. 

Lenders assess factors such as the age of the car and whether its model has been discontinued before approving a used car loan. Typically, the combined age of the vehicle and the loan tenure should not exceed 8-10 years. Securing adequate funding becomes increasingly challenging for older cars. It is advisable to opt for newer car models, preferably not older than 2-3 years, to enhance the chances of loan approval.

Continue reading to learn how to get used car loan.

What is a Used Car Loan?

A Pre-owned Car Loan is a financing option designed to facilitate the purchase of a used vehicle, offering a streamlined application process through a bank. Enjoy advantages such as competitive interest rates and the flexibility of a repayment period extending up to 7 years. Here's how to get a car loan for a used car.

Benefits Of Second-Hand Car Loan

Below are the key advantages on how to get a loan for second-hand car:
• The borrowed amount is typically lower compared to a new car loan, resulting in lower monthly EMIs.
• Enjoy a lengthy repayment period.
• Some banks and NBFCs offer up to 100% financing.
• The application process is straightforward and can be conveniently completed online.
• Insurance expenses and depreciation rates tend to be lower than those for new cars.
• Minimal paperwork requirements.
• Certain banks and NBFCs provide flexible repayment options.

Eligibility Criteria for Used Car Loan

Now, let's explore how can I get a used car loan by looking at the eligibility criteria for Pre-owned Car Loans:

Documents Required for Applying for Second-Hand Car Loan

The eligibility requirements differ for salaried employees and self-employed individuals, as outlined below:

Salaried Employees
   

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

Self-employed Individuals

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

Rate Of Interest of Second-Hand Car Loans Offered by Top Banks

Fees & Charges on Used Car Loan

How To Apply for a Used Car Loan?

Offline Method
Here are the steps to apply for a used Car Loan using the offline method:
    • Visit the preferred bank branch or NBFC office.
    • Complete the application form provided.
    • Submit the required documents to assess your eligibility for the loan.
    • Discuss with the lender regarding interest rates, processing fees, and other relevant details to proceed with the loan processing.

Online Method
Some lenders offer the convenience of applying for a used car loan online. You'll be required to visit the bank's official website and input basic information such as your name, mobile number, email ID, etc. After providing these details, a representative from the bank will get in touch with you to proceed with the request.

Conclusion

So, this was all about how to apply for a used car loan. Purchasing a used car through a loan is a practical choice for numerous individuals in India. By familiarising yourself with the eligibility criteria, necessary documentation, interest rates, and loan terms, you can confidently navigate through the loan application process.