As per a recent survey, the used car sector recorded a sale of 4.4 million vehicles in the fiscal year of 2020. The number is significantly high when compared to the 2.8 million new vehicles sold in the same year.
- Used car vehicles accounted for 18% market share.
- CAGR growth of the market for the used card for the 2020-25 period was projected at 15.12%.
Some reports further indicate that the organised sector of the used market had successfully doubled between 2011 and 2019. Ideally, the low cost involved in the purchase is regarded as among the most prominent reasons for the growth and popularity of used cars in India. Above all, the availability of used car loan at an affordable rate of interest pushes the demand for old vehicles further.
Nonetheless, as a borrower, an individual should make it a point to become familiar with the salient features of loans for a used car and its alternative funding option to make an informed decision.
Things to Know about used Car Finance
These pointers below highlight the noteworthy features of used car loan in brief –
The eligibility criteria for second hand car loans depend on several factors and vary from one financial institution to another. However, factors like the applicant’s repayment capability, monthly income and car’s value tend to influence one’s eligibility.
Interest rate accompanying a used car loan is vital when it comes to determining whether a loan would be affordable or not. Generally, the rate of interest depends on the vehicle’s value and loan amount.
Valuation and charges
It is quite challenging to determine the value of a used car when compared to a new one. Ideally, financiers weigh in multiple factors in determining the current value of the vehicle in question. A few of such factors are –
- Number of kilometres covered by the car
- Purpose (commercial or personal use)
- Place of use
- Number of modifications done (if any)
Individuals are required to submit a host of documents to apply for used car finance in India. Generally, such documents include – the registration certificate, insurance policy, Form 32 and 35, car invoice and road tax receipt.
Ideally, financiers may extend this loan for 60 months tenure. This often allows borrowers to spread out their repayment easily. Nevertheless, the said tenure often relies heavily on the vehicle’s condition and the borrower’s age.
Insurance policy and certificate
Usually, financial institutions refuse to sanction a loan for used cars if the vehicle’s insurance policy in question has not been renewed. Additionally, applicants will fail to secure a loan if the vehicle’s registration certificate is not in the seller’s name.
Nevertheless, with the availability of options like personal loan, individuals who do not meet the stringent requirements of credit for a used car can avail required funding assistance easily.
Personal Loan for Used Cars – A Suitable Alternative
Before applying for this alternative credit option, individuals must know about personal loans for used cars in detail.
Nevertheless, these following features of a personal credit tend to work for individuals who plan to purchase a used car –
- It is a collateral-free loan option. Applicants do not need to pledge any asset to avail it.
- This loan does not levy any restriction on the end-use. So, borrowers can easily use the loan amount to purchase a second-hand car or renovate the current one.
- Unlike a traditional loan for the used car, a personal loan’s disbursal process is quick and less cumbersome.
- The current value of the car in question is not factored in before sanctioning the loan amount.
Also, several financial institutions like Bajaj Finserv provide substantial loan at simple terms of repayment and are transparent about additional charges.
They also provide pre-approved offers to customers to make the process of availing a loan less cumbersome. Usually, such offers are available on financial products like personal loans and business loans. Check your pre-approved offer online with the help of name and contact number.
Before applying for this credit, individuals should use a personal loan calculator to ascertain the monthly instalments and analyse their repayment capability.
Hence to know about a used car loan, it is important to become familiar with the accompanying features and associated terms. However, one can avail this loan only for second-hand cars with proper documents and a valid insurance policy.