Car ownership has turned from a mere symbol of stature to a necessity, especially in cities with high traffic or limited public commute. Cars have also proven to be a great help when it comes to travelling long-distance with friends or family. In this growing market demand, a huge share is also occupied by the increasing demand for used cars. Owning a second hand car has lately gained traction, particularly for the high affordability it offers, easy financing with reduced burden of repayment coupled with long shelf life at reasonable cost.
Simultaneously, the financial market has also been providing funding in the form of used car loans to enable maximum prospective buyers to complete their dreams of owning a car. Second-hand car loans have thus come off as one of the most popular funding options for various reasons. Let’s check out what makes these cars so popular and other pertinent details related to it that you can utilise when financing a used car purchase.
Reasons to Avail a Used Car Loan
Here’s a detailed insight on the top reasons that make a used car loan popular among Indians.
High financing value
Second hand car loans are sufficiently financed to enable individuals to purchase their desired car model. Although used cars attract a much lower cost than their new counterpart, the financing amount can still be high depending on the car model you select. Such cost is also affected by the years of use a car has been subjected to. Since the depreciation of the car model determines the value of the vehicle, the cost will be set accordingly.
Accordingly, the selling price for a used car can easily run into lakhs, which can make it burdensome on your personal finances. It is thus ideal to go for a second hand car loan for such financing, whereby the amount you can receive can go up to as high as Rs.50 Lakh. You only need to meet all the eligibility requirements and carry a high repayment capacity to afford the EMIs payable for the available tenure to secure such financing.
Flexibility in repayment tenure
To aid individuals repay a used car loan conveniently with minimum financial strain, lending institutions also provide flexibility in tenure selection. With some of the best lenders, the repayment tenure for a second hand car loan can easily go up to 5 years.
Based on your income, repayment capacity, and the loan amount desired, you can select a suitable tenure flexibly. Utilise dedicated financial tools like EMI calculator to assess whether the instalments payable remain comfortably under your repayment capacity or not to choose the right tenure for loan repayment.
When using an EMI calculator, you would be require to provide the loan amount sought, a suitable tenure per se, and the applicable interest rate. While the interest rate is determine by the lender, you can make changes to the loan amount and tenure to arrive at a suitable EMI payable. Remember, tenure selection is inversely proportional to the EMIs payable. Thus, when you select a long tenure, the EMIs are less while a shorter tenure selection results in higher EMIs. Herein, make sure to consider the total interest payable as well based on the term involved to choose a tenure that keeps the EMIs affordable while also keeping a check on the interest payable.
Affordable and competitive rates
Several lenders today provide used car loans at attractive rates to ensure affordability for individuals across the economic strata. Thus, even if you earn decent income monthly, you stand a good chance of securing a suitable second hand car loan provided your finances are sorted and sufficiently managed to reflect a good credit history.
The interest rate levie on your second hand car loan is an indicator of the risk involved in lending base on your borrowing profile. Thus, taking care to minimising such risks can help secure the lowest rates possible for used car financing. Apart from selecting a lender offering the lowest rates, following are some of the ways you can follow to secure affordable rates on your loan.
- Provide documents for all income sources, which should significantly improve your repayment capacity.
- Apply for a loan ticket size smaller than the maximum amount you are eligible for, which would automatically raise your eligibility.
- Keep your repayment history clean, with timely repayments without any delay or default.
- Maintain a balanced credit mix of secured and unsecured advances.
- Apply for the loan with a co-signor to improve the total loan eligibility.
- Opt for a longer tenure to keep the EMIs in check for improved eligibility.
- Reduce the overall dependency on credit.
- Keep the percentage of income occupied by fixed monthly liabilities at less than 50%.
Keeping these factors in mind, you can easily negotiate for a reduced rate of interest on your used car loan.
Easy loan application
With simple online process requiring only a few minutes, lenders also make it easy to apply for a second hand car loan today. Once you have met the eligibility requirements, you can proceed to fill up the online application hosted on your selected lender’s website with necessary details.
Once complete, submit the application with necessary documents that can include identity proof, address proof, employment proof and income proof. If all the eligibility requirements are in place, you can expect quick loan processing and approval.
Financing available for all car brands and models
Another top reason why you can go for a used car loan for second hand car financing is that the loans are available for all car brands and models. However, you must take care that the car you are purchasing is not older than two to three years as such vehicles have a high depreciation value and the financing available for the car can reduce significantly.
Also, make sure to check whether it has been cover by an insurance policy or not, which may save you from unnecessary hassles.
Once you have decided on the used car model to purchase, you can proceed to select a suitable loan amount for its financing. Choose a lender offering the best of these features for maximised benefits and proceed to apply for your used car loan with the necessary documents.
Visit the official page for more details.