In India, the market for pre-used cars is in higher demand comparing to brand-new automobiles, particularly for first-time car buyers. While buying a second-hand car, a personal loan on used cars can be a reliable way without breaking your savings at last.
However, relatively a small percentage of Indian used-car-buying patrons finance their purchase with the support of loan than a bulk of those purchasing brand-new wheels. It is perhaps because getting car loans for pre-used cars from financial lenders can be expensive yet difficult sometimes. But, today, numbers of bank and financial institutions grant loans for second-hand wheels to the purchasers easily, effortlessly.
So, before you proceed with applying for your car loan, here are some vital factors that you have to keep in mind to smoothen your loan procedure.
5 Factors to keep in mind while applying for a loan on used cars:
#1. Loan Amount – Banks and other financial institutions provide a certain percentage of the Insured’s Declared Value or utilise their individual valuation process for any used car. Usually, this valuation is much lower than the price you require to pay off for the vehicle. Aside, you also expect to cover the remaining amount from your pocket. In some cases, the approved loan amount gets determined depending on your eligibility, not the car’s value.
#2. Interest – Though used cars on high demand, traditional loan lenders hesitate about financing second-hand cars at economical rates. So, when you approach any NBFC or bank for a used-car loan, the interest rate will generally be approx 3-4% higher than rates for new car loans. Besides, if you hold a decent credit score, some loan providers may grant your second-hand car loan from an available line of credit, which will be much cheaper. However, you can also make additional payments to lessen the cost upon which interest get charged without prepayment penalties.
#3. Tenure – Whether you plan to obtain a traditional personal loan or a used car loan from a bank, the lender will provide you with a minimum tenure repayment period of 5 years. Yet, in some cases, the tenure period can also be less than 5 years.
If you fail to repay the whole amount within the designed period. You may have to bear heavy fees as well as penalties. But, if you search, you may find a personal credit line from several loan providers. Which is available for a lifetime period. Hence, you can borrow the finance amount from them when you are in need of a pre-owned car loan.
#4. Documentation – For any type of loan, whether it is a personal loan, home loan, new car loan, or used can loan. Documents play a vital role in every case. However, the records and documentation required for second-hand car loans can often be very complicated. Most importantly, the majority of banks and non-bank financial institutions will only sanction the loan after checking. And verifying the detailed documents.
For pre-owned car loans, banks and non-bank financial institutions check if the dealer or seller has transferred the car documents and title to the buyer’s name. They can easily refuse to give you the loan if the Registration Certificate or RC is not in the seller’s name. Or if you have not renewed the insurance before applying for the loan. If you maintain good credit in the money lending organisation already, you will not have to face these hassles. The company will approve your loan efficiently.
#5. Approval Process – The process of application submission and approval for a pre-owned car might take a while. In general, the process usually requires several visits to the financial organisation or bank offering you the loan. Once your loan gets approve, the disbursal of funds can take a minimum of 7 business days. However, the personal loan may get sanction a little earlier yet can still take a few days.
Last Words:
If you are planning or looking for applying for a loan on used cars, you do not need to wait around for funds anymore as you can get the loan approved right away with many money lending institutions or banks. Eventually, these days, multiple banks and financial institutions offering borrowers to apply for a loan on the online portal. Reducing ere paperwork, making it convenient for you!
Get more information about loans and finance from the official website.
