Lenders take into account the age of the vehicle and if the model has been discontinued before approving a used auto loan application. In the case of a used car loan, the total age of the vehicle plus the loan term cannot be greater than 8–10 years. It becomes more difficult to secure enough cash to buy an older car. Choose an automobile that is no older than 2-3 years old and that is newer.
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The purchase of a used or pre-owned car is favored by many people today. While the majority of banks and non-banking financial services organizations (NBFCs) also provide personal loans for used cars with attractive interest rates and no down payment options, the majority of automakers also have their own pre-owned divisions.
Advantages of Buying a Used or Second-Hand Car
When they desire to acquire a brand-new vehicle, the majority of consumers are hesitant to get a used vehicle. But buying a secondhand car provides a number of advantages, such as:
- There are numerous organized used-car merchants today who make sure used vehicles are free of damage, kept up correctly, and certified.
- Instead of scratching a brand-new car, it is best for inexperienced drivers to practise driving in an older vehicle. You can select a new car and drive it with assurance once you have mastered the art of driving.
- A car’s depreciation rate is highest within the first two years after purchase. Fortunately, the depreciation costs of a used car are not a concern for the owner.
Look for used auto loan offers from the best lenders in the nation once you have decided on the specific make and model of the vehicle you want to buy.
Visit a trustworthy third-party website to examine different used auto loan offers, then select the one with the lowest interest rate, no processing fee, the right loan term, and flexible repayment options. After deciding on a reliable lender who guarantees little paperwork and quick loan disbursement, confirm the bank or NBFC’s requirements for car loans eligibility.
Eligibility for Used Car Loans
Any salaried or self-employed person between the ages of 21 and 65 with a reliable source of income, a solid credit rating, and a steady job can apply for a used automobile loan. Different lenders have different loan terms, interest rates, and loan amounts for used cars. Because used cars have a lower market value than new cars, lenders charge higher interest rates for used car loans. A lower interest rate is always negotiable with the lender. Additionally, due to high maintenance costs and a lack of readily available car components, the insurance cost of a used car is higher than that of a new one.
Submitting an Application for a Used Car Loan
As long as the combined age of the automobile and the loan tenure doesn’t exceed 8–10 years, banks will lend up to 80–85% of the entire value of a used car for a loan term of 1–5 years. When you go to a bank for a used automobile loan, the bank will hire a specialist to appraise your vehicle. The bank will provide you between 80 and 85 percent of the car’s overall value, as determined by the valuation expert. Both the down payment and the differentiation amount must be paid out of your own money.
Obtain the auto loan application form from the bank’s website, fill it out, and submit it with the required documentation.
Used or second-hand vehicle loan EMI
A used automobile loan is repaid in the same way as a new car loan over a predetermined loan term: Equated Monthly Installments.