Guide That Will Help You To Buy Used Car Through Financing

The demand for second-hand cars has increased substantially over the last few years. With the availability of high-end vehicles in the market, consumers are preferring used cars of the same brand and model over new cars.

With the money you want to buy a new car, you can get a used car and make two international trips to your favourite destinations. 

Given the current financial instability, not everyone can afford to buy a second-hand car. In such cases, you apply for second-hand finance to manage your finances without putting any burden on your pocket. You can get up to 90% of your vehicle’s value as a loan.

Depending on your repayment capacity, you can get affordable EMI and flexible loan tenure to repay your loan without any defaults. However, it would be wise to use a used car EMI calculator to determine your EMI affordability.

Here are a few things to keep in mind before applying for second hand car loan

Loan amount

The loan amount that you can get depends on factors, such as IDV, income, credit score, etc. Lenders generally offer up to 90% of the vehicle’s value as a loan. For instance, if a used car costs Rs. 100,000/-, you can secure up to 90,000/- as a loan. You will have to pay the remaining amount as a down payment. However, it is worth noting that the lower your loan amount, the better the interest rate that you will get.

Interest rate

While applying for a second hand car loan, you will need to be aware of the interest rate offered. It generally ranges from 8% to 15%, depending on your age, income, credit history, current financial obligations, etc. Besides, interest rates vary across different lenders in India. You will need to compare different lenders and their rates to choose an interest rate that best serves your needs. 

Used car loan EMI calculator 

Before applying for second-hand car finance, you must assess your affordability and choose an EMI amount that you can afford to pay every month without putting any burden on your finances. You can use your lender’s used car loan EMI calculator to determine a suitable EMI amount based on your needs and preferences. 

Also Read: Investment Option For Women With High Security In 2022

Down payment

As mentioned earlier, you can not avail of 100% of your vehicle’s insured declared value as a loan. You will need to pay a certain percentage of the loan amount as a down payment. If you wish to secure a lower interest rate, you need to make a higher down payment. A higher down payment indicates a lower loan amount, and a loan amount attracts a lower interest rate. 

Eligibility criteria 

Before applying for second-hand car finance, you will need to meet the eligibility criteria set by your lender, which are: 

  • You must be an Indian citizen to apply for second-hand car finance. 
  • You must be a salaried employee of an organization or a self-employed professional. 
  • As a salaried individual, you must earn a minimum monthly income based on your lender’s policy. 
  • As a self-employed person, you must show a minimum net profit based on your lender’s policy. 
  • You must maintain a minimum credit score of 750 or above. 
  • After meeting the requirements, you will need to prepare the documents required. The documents may include your KYC documents and vehicle papers.

If you follow all these guidelines, and tips, there will be no problem with second-hand car financing.

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By Michael Caine

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