With the financial instability induced by the unprecedented pandemic in recent years, it would not be wise to buy a new car. Instead, it would be prudent to opt for a used car that offers the same features and comes at a significantly low price. Let’s see the benefits of taking a used car loan.
However, not everyone can afford to buy a second-hand car due to the rising prices and reduction in income. In such cases, you can take a used car loan to own a car and get one step closer to freedom from the public conveyance. The best part about a used car loan is that you can buy your favorite vehicle without hurting your savings.
Some lenders offer up to 90% of the vehicle’s insured declared value as a loan. You will need to pay the rest in a down payment. You can avail of affordable interest rates, making it easy to pay the monthly EMIs without any defaults.
Benefits of taking a used car loan
A used car loan is loaded with a host of benefits that you can avail of to manage your finances well.
- Maximum loan amount
Since the loan amount is calculated based on the insured declared value of the vehicle, you will receive a higher loan amount. Some lenders offer up to Rs. 10 lakhs or almost 90% of the vehicle’s value as a loan. However, to get a maximum loan, you will need to ensure meeting the eligibility criteria based on factors like your age, income, credit score, and current financial obligations.
- Affordable used car loan interest rates
Another benefit of used car finance is that you can avail of lower used car loan interest rates that will help you save costs. The lower your interest rate, the lower EMI you will have to pay every month. To get the best interest rate, you will need to have a stable income and a healthy credit score.
- There is an absence of collateral
A used car loan is an unsecured loan offered to salaried and self-employed professionals. It means that you are not required to pledge your assets as collateral. However, you must establish that you have a stable source of income and a healthy CIBIL score before applying for a loan. A credit score enables the lender to understand whether or not you can repay the loan without any defaults or delays.
- Flexible repayment tenure and terms
Much of a used car loan’s popularity stems from the fact that you have the flexibility to choose a loan amount based on your needs and preferences. Also, before opting for a loan, it would be wise to determine your EMI affordability. You can use the online EMI calculator to calculate the monthly EMI that you can afford to pay.
In addition, there are multiple available repayment methods you can choose from based on your preferences. For instance, you opt for post-dated cheques, online payment, Electronic Clearance Services (ECS).
- Minimum documents required
The documents required to apply for a used car are the bare minimum. Anyone with a stable income and healthy credit score can apply for a used car loan to buy their dream vehicle. Although the documents vary across lenders, here the documents that are common across all platforms:
- KYC documents such as PAN Card, Aadhaar Card, Passport, Driving license are required to verify your identity, address, and age.
- Your bank statement, salary slips, and ITR are needed to verify your income.
- Easy prepayments
It also allows you to pay the loan amount in full before the loan tenure is ended. It should be noted that the terms and conditions of loan prepayment vary across lenders’ policies. Some lenders may offer the facility to prepay the loan amount only after a specific time, while others may not even have such requirements.
Before applying for a used car loan, read the terms and conditions of your lender’s prepayment policy.
- Online application process
Your days of visiting a physical location and standing in long queues to apply for a used car loan are long gone. With the advent of the internet, the entire application process of a used car loan has become digitized. You can fill in your application form, check your credit score, calculate your EMI, and submit your documents from the comfort of your home or office. You can also receive the approved loan amount into your bank account.
You can buy your dream vehicle with a used car loan and manage your finances without the need to ask anyone for financial or even redeeming your savings and investments.