Things To Consider Before Availing A Used Cars Loan

Hassle free commuting has always been a major necessity for humans throughout many generations. With the rise in population in a country like India, it is a bit challenging to use public transport. Also, owning a car can be of great benefit. One can travel wherever they wish to and according to their own time. In this century, there has been a growing desire to buy a car, and most people prefer a second-hand car.

Why Pre-Owned Cars?

One of the major advantages of owning a used car is that you need not worry about the depreciation of the car. You can save huge amounts of money on the same. Moreover, you can even take a used cars loan to finance the second hand car your desired and resell it further whenever you want. These advantages have significantly impacted the rise of sales in used cars. There were more than 4 million used cars sold in FY 2019 that is more than 2.1 times the sale of new cars in the same year.

Benefits of Used Car Loans

With the rise in used car sales, there has been a substantial increase in the need for loans as well. This is due to the many benefits that are offered under it. It is a straightforward fact that the loan tenure will be smaller due to the smaller loan amount. Although, one can avail loans of up to 5 to 7 years as well based upon their convenience. Some loans also let you get up to 90 to 100% of financing for your used car as well. Also, with the rise of technology, the process has become fairly simple and hassle-free, making your loan approval and disbursement quicker than before.

Eligibility to Avail Car Loan

To avail any type of loan, lenders look at some criteria that are crucial in giving out loans, in case of car loans, these are some of the fundamental criteria:

  • Age

The minimum age to be eligible to apply for a used car loan is 21 years. Likewise, the maximum age for applicants is 65 years.

  • Minimum Income

An applicant needs to have a minimum salary of INR 15,000 per month in the case of salaried applicants or either a net profit of INR 1,50,000 per year if they are self-employed.

  • Employment Status

It is important to have a stable job in order to be eligible for a loan. Lenders make sure that you have a stable job history and are also currently employed either self-employed or as a salaried employee.

  • Vehicle Age

The car on which the loan is taken upon, on the time of maturity must be less than 10 years. This is due to the depreciation value considered by the banks and lenders.

Important Things To Consider

Before opting for any type of loan, it is essential to know the ins and out of the whole thing. The applicant must be aware of all the types of schemes available, the range of interest rates, the loan duration and also the various loan providers.

  • Interest Rates

There are many banks and financial institutions that offer a wide range of interest rates. Most of the lenders offer a rate of interest for used car loans of around 10% to 12%. Although you can even find some financial institutions like Muthoot Capital Service Ltd providing interest rates as low as 8.5% to 9%.

  • Loan Duration

Similar to the wide range of interest rates offered, there are flexible repayment options provided as well. You can calculate the total amount by using the lender’s used car loan calculator for your customized plan.

  • Other Factors

Apart from the main factors such as interest rate and loan duration, the other significant factors are age of vehicle, ratio of debt to income, size of loan and the down payment amount as well. 

Choosing Your Used Car Loan Provider 

Due to the variety of lenders available for used car loans, it is up to you to have a thorough knowledge and choose the best lender. Although most of the used car lenders do not provide loans if there is no substantial income, Muthoot Capital Services Ltd offers loans under no income base, income-based and asset proof base for its customers. Therefore choose a lender based upon your needs and priorities.