Having your car has become a necessity during the COVID-19 era. Instead of traveling via public transports like buses and metros, it is safer to have your vehicle and commute to work safely. Besides that, the demand for second-hand cars has also surged for the past few years. A used car allows you to access your dream vehicle at the most affordable price.
Not everyone can afford to buy a used car due to the rising prices, but that does not mean one should give up on their dreams. You can buy your dream car by applying for used car finance without putting any burden on your pocket.
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It enables you to get one step closer to freedom from public conveyance and also have the luxury of owning a car.
Here are some of the crucial tips to know before applying for used car finance.
- Know your interest rate
Second-hand car loan interest rate is a crucial factor influencing your monthly EMIs. Before applying for used car finance, you should consider the interest rate that you are eligible for. The second-hand car loan interest rate varies across lenders. It can range between 10% to 18% per annum. It is worth noting that the rate of interest depends on factors like your age, income, credit score, and current financial obligations.
- Be aware of the application process
A used car finance approval process is lengthier than other loans. When the seller agrees to transfer the vehicle documents in the buyer’s name, the lender will verify the registration certification along with the insurance document. It can take up to five working days for the documents to be verified before your loan application is approved. Being aware of the loan application process allows one to be well-informed before applying for used car finance.
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- Buy a used car from a reputed dealer
The dealer you buy your used vehicle plays a vital role in getting your used car finance application processed. If you buy a used car from an authorized dealer or online marketplace with a good track record, you will not only get a good car but build a relationship with your lender and streamline the borrowing process.
- Maintain a good CIBIL score
Your CIBIL score plays a crucial role in your loan application. It is the first factor that your lender considers before approving your loan application. It indicates your creditworthiness, based on which the lenders establish whether or not to approve your application.
Having a healthy credit score means that you are in good credit standing and you are a responsible borrower. It ensures the lender that you will repay the loan amount on time. So, make sure you have a minimum CIBIL score of 750 or above to not only get approval but also avail of a lower second-hand car interest rate.
- Calculate your EMIs
Your equated monthly installments (EMIs) constitute part of your loan amount, second-hand car interest rates, and repayment tenure. Before applying for a used car loan, you will need to determine how much you can pay in EMIs. You can do it by using an online EMI calculator to get an affordable EMI.
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- Ensure to meet the eligibility criteria
Your lender will have certain eligibility criteria that you will have to meet to get a used car loan. Following are the criteria that common across all platforms
- You must be an Indian citizen who is currently working at a private or public under or you are a self-employed professional.
- You must be at least 21 years old at the time of application and 65 years old at the end of the loan tenure.
- You must earn a minimum net salary or profit based on your lender’s policy.
Check your lender’s eligibility requirements before applying for a used car loan.
- Arrange the requisite documents
The documents required to apply for used car finance vary across lenders. You will need to check on your lender’s website to know about the documents required. These documents may include:
- Identification proof: Aadhaar Card, Passport, Driving License, or Voters ID Card.
- Address proof: Aadhaar Card, PAN Card, Passport, Driving License, Utility Bill, Ration Card, or Voters ID Card.
- Age Proof: Aadhaar Card or Passport
- Income proof: Bank statements, Salary slips, Income Tax Returns (ITR), form 16.
- Asset proof: Latest land or house tax receipts.
- One recent passport-size photograph.
There are numerous used car loans available in the market. However, you must assess your needs and choose one that caters to your requirements and preference. You should be able to repay the loan amount without default.