How To Apply For A Loan When Buying A Used Car

One has to buy a used car in decent condition and less than seven years old, as used car loans depend on these factors.

With : HT Auto Desk
|
Updated on:
April 18, 2022, 1:10 p.m.

A used car can be purchased either by the owner directly or through a reseller.  (MINT_PRINT)
A used car can be purchased either by the owner directly or through a reseller. (MINT_PRINT)

Used cars are in great demand. As personal mobility becomes more prevalent, used cars are in increasing demand and sometimes, the market even poses challenges to new car sales. While many consumers are considering buying a used car instead of spending money on a brand new car, choosing the right used car could be a daunting task.

(Also read: Five things to do before handing over your car keys to the next owner)

While buying a brand new car can cost the consumer a hefty amount at a time when the price of new vehicles is rising rapidly. Used car prices in India are also rising but at a slower pace. This often pushes used car buyers to take out loans from banks or the NBFC.

New car loans are usually accompanied by a maximum repayment period of up to seven years, while the repayment period of a used car loan depends on the age of the car. The majority of public and private banks along with NBFCs offer used car loans to their customers. However, the terms and conditions for a used car loan may differ from new car loans.

See how to apply for a used car loan.

Choose the seller

Used cars can be purchased in two ways – directly from the owners or from resellers or used car dealers. If you are buying a used car directly from an owner, you need to take care of all the paperwork and hassle. Some banks and NBFCs offer used car loans at reduced interest rates when you buy a used car from a certified reseller. In these cases, the reseller or dealer takes care of all the paperwork and helps to get a loan from their affiliated lenders.

Plan your budget

Before buying a used car, always plan your budget properly. Calculate the amount of money you will be comfortable paying before buying the car. It is always advisable to go for a car loan that you can easily avail and which will not burden your financial health.

Condition and age of the used car

One has to buy a used car to check if it is in decent condition and needs minimal maintenance. Do not just buy a used car to have a vehicle even if it is not in good condition. It may affect your operating expenses in the long run. It does not make sense to buy a used car that may be accompanied by recurring problems. In addition, the condition checks the age of the car before buying. Usually, it should not be more than seven years old, because otherwise, the possibilities of repairs and replacements could be greater. Lenders take into account the age of the car before giving a loan.

Choosing the right lender

After choosing a car, you need to check with the lenders from whom you want to get the loan. You can compare many lenders to get the best deal based on interest rate, loan margin, repayment charges, repayment period, etc. Also check the lender’s suitability standard and applicable terms and conditions.

Submit loan documents

Once you have selected the lender, when you approach him for a used car loan, you will be asked for a wide range of documents. These include proof of identity, proof of address, proof of income, invoice, copy of seller’s RC book, copy of car insurance from seller, etc.

How To Benefit From A Used Car Loan

Step 1 :

Choose the seller

Step 2:

Plan your budget

Step 3:

Condition and age of the used car

Step 4:

Choosing the right lender

Step 5:

Submit loan documents

Date of first publication: 18 April 2022, 13:10 IST

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