Second-hand cars are attractive because of their low prices. Various financial institutions and lenders finance for a second-hand car in convenient installments. If you intend to buy a used car, you must inspect the vehicle’s condition, registration date, and mileage. Also, be sure that spare parts are available and after-sales care is provided.
According to industry observers, there has also been an 18% increase in used auto loans. On the other hand, used car loans are more challenging to obtain because the vehicle’s age and model play a significant factor in financing second-hand cars. Furthermore, used automobile loans are 3% more expensive than new ones. If you’re considering buying a used car, there are a few things you should keep in mind.
Interest rate
Before applying for the finance for a second-hand car, it should be the first thing you need to consider. The interest rate is a critical component that influences the amount of your EMI. The interest rates on all platforms are between 10% and 18% per year. Remember that the interest rate you get will be determined by the age of the used car as well as your income.
Loan approval process
Getting a loan for a used car is a time-consuming process. Before the loan is authorized, the process usually takes 4-5 days. The affidavit to transfer the car papers into the buyer’s name should be signed by both the buyer and the seller. The bank then examines the registration certificate and insurance documents to change the buyer’s name in documents. Once the KYC processes are completed, a consumer with a strong credit history can secure loan approval in a day for new auto loans.
Complete Documents
First, buyers should always go over all of the documents before purchasing. Before approving finance for a second-hand car, the lender will independently verify the papers and evaluate the vehicle based on internal metrics. Furthermore, the value of a used car might vary based on its usage, the number of individuals who have used it, the number of times it has been moved, and the mileage, among other factors.
Second, you must provide the following documents to apply for used automobile financing:
- Identification, residence, and age verification documents are required for the KYC process.
- Bank statements, ITRs, Form 16s, and pay stubs are all acceptable forms of income verification.
- Land or building tax receipts are examples of asset proof.
- A photo of the applicant in passport size.
Loan Tenure
Although you can choose a loan tenure based on your preferences, the loan tenure you can acquire will be determined mainly by the condition and age of the car. Your lender will probably finance you less if the used car requires a lot of maintenance. Another consideration is the payback loan term, which can range from one to five years.
Aside from that, you should avoid buying a car older than five years, as lenders do not prefer second-hand vehicles that are older than that. A representative from the lender will examine the car’s value before deciding on a loan amount and repayment period.
EMI (Equated monthly installments)
Your EMIs cover a portion of the principal and interest on your loan. Before applying for a used car, you must first examine your needs and determine an EMI you can afford to pay without default. Knowing your EMIs allows you to organize your monthly budget more effectively.
Use a free online second-hand car on EMI calculator to figure out what your EMI should be. It’s an online financial calculator that generates a personalized answer depending on your preferences. To calculate your chosen EMI, you’ll need to input the loan amount, interest rate, and loan tenure. You can change these numbers as many as you like until you find an EMI that you can afford.
Car insurance
Car insurance is required by law, and it is essential to understand that lenders may refuse to evaluate a loan application if the insurance is not renewed. Check that the registration certificate (RC) is in the seller’s name and that the car is not more than five years old.
According to one pre-owned automobile platform, the pre-owned car market is 1.2 times the size of the new car market in terms of vehicle sales. Year-over-year, organized used automobile dealers are rising at 19 percent. Also, the number of women inquiring about used automobiles has increased 400%”.
In short, with a limited budget, the buyers can always opt for finance for a second-hand car. It will complete their requirement and simultaneously not put them under extreme financial pressure. Meanwhile, a second-hand car loan EMI calculator guides them regarding monthly installment, which means they can select the loan amount as per their capability of paying back on time to the lender.