Around 4 million second-hand cars were reportedly bought and sold in the financial year of 2018-2019. Such numbers can be accredited to a growing affinity towards securing fair value against their purchase. Similarly, the fact that most financial institutions are now extending substantial credit as pre owned car loans has further helped to boost this market.
However, to ensure one avails the best bargain while availing a loan to purchase a used car, borrowers must make it a point to check all of its aspects in detail. Additionally, they should consider a few things and proceed with a loan accordingly.
For instance, here’s what intending applicants of used car finance should keep in mind before availing a credit –
- The tenor of the loan – Being a short-term loan option, pre-owned car loan comes with a tenor that usually extends up to 60 months. However, it should be noted that the chances of securing an extensive tenor depend on the car’s condition.
Additionally, cars that have been in use for a considerably long time and require frequent maintenance are more likely to avail a credit with a shorter-tenor. Regardless, opting for a financial institution that extends a personal loan against a convenient tenor would come in handy for borrowers who wish to buy a pre-owned car.
- Eligibility for the loan – Similarly, the personal loan eligibility for availing this credit facility is something every intending borrower must check before applying.
For instance, financial institutions often extend the loan for pre-owned cars to individuals who meet these following criteria –
- Salaried applicants should be between the age of 23 years and 55 years. Additionally, they must have a year’s experience and earn at least Rs.25,000 as monthly salary.
- The vehicle in question should not have had more than 3 owners previously. Also, it should not have been in use for over 10 years.
- Documentation process – Next, individuals should find out the documents that would be required to avail a pre-owned car loan. Most financial institutions like Bajaj Finserv require applicants to submit documents that serve as proof of income, address and identity proof, for example, KYC documents, latest bank statements, income tax returns, and salary slips.
Also, such financial institutions provide their customers with attractive pre-approved offers on their products and services. Such an offer simplifies the entire process and makes it hassle-free. You can check your pre-approved offers by providing simple details like name and contact number.
- Loan interest rates – Typically, such loan options come with affordable interest rates. This makes it vital for borrowers to compare the prevailing rate of interest offered by different financial institutions before availing a credit. Ideally, individuals should look for personal loan interest rates that make the repayment easier and more systematic.
Doing so, they would not only secure a competitive deal but will also be able to opt for an option that helps them save money during the repayment tenor.
- Application and approval process – Generally, borrowers can apply for a pre-owned car loan both online and offline. Consequently, applicants must find out both processes of how to apply for a personal loan for a used car to opt for a convenient option.
Successively, they should find out how much time is taken to verify and approve a loan application. Top financial institutions take 1-2 days to process and verify the loan application along with other vital documents like the registration certificate and the insurance report.
- Insurance and registration – Car insurance is one of the major things to consider before buying a used car. A second-hand car that is registered under the respective seller’s name and has a renewed insurance policy is more likely to secure a loan application from a financial institution. Therefore, individuals must make it a point to ask for documents about the car insurance policy and registration from the seller before proceeding with the deal. Likewise, they should opt for a car that is less than 10 years old to make sanctioning of the loan hassle-free.
Therefore, before applying for a pre-owned car loan, applicants must compare applicable loan interest and features that come along with such loan options. Further, they should find out about the loan tenor, eligibility, and required set of documents to proceed with the application process. They should also ask for an insurance policy and registration certificate from the car seller to increase the chances of loan approval.
Hence, by considering these pointers, one would be able to opt for a suitable personal loan option and would further be able to benefit from it substantially.