A few years ago, people used to buy cars because it brought a sense of status and identity. Today, it has become more of a necessity than a luxury. The public transport is only getting overcrowded, which is not advised to opt for during the COVID-19 pandemic, and the cab services are getting expensive every day.
The reasons to buy a car are galore. But, not all of us have enough savings or investments to buy a new car, even on a loan. However, there is another option you can use to meet that requirement –choosing a second-hand car and financing it through a used car loan.
With used car loans, you can afford almost any brand or model of car. There is a huge range of vehicles that you can choose from.
Opting for a used car loan enables you to navigate through daily traffic and get one step closer to freedom from public transportation.
Why opt for used car loans?
A used car loan allows you to buy your dream without putting any burden on your savings or monthly budget. You can get up to 80% to 90% of the vehicle’s value as a loan, and you can make repayments within 12 to 60 months after approval. Used car loan rates start from 8.5%, allowing you to repay the loan amount without much financial stress.
However, it is worth noting that the interest rate depends on income, credit score, existing financial obligations, etc.
Here are the benefits of taking a used car loan:
Higher loan amount
The used car loan amount depends on the insured declared value of the vehicle. Some lenders may offer up to 80% of the car’s value as a loan, and others may even offer up to 100% of the vehicle’s insured declared value. Depending on the brand of the car, a used car may cost you a significant amount of money, and a used car loan can get you that money.
It is worth noting that your loan amount eligibility depends on factors such as age, income, credit history, condition of the car, etc. It would be wise to opt for a lower loan amount if you wish to avail of a lower used car loan rate.
Hassle-free application process
Thanks to the internet, you no longer need to visit a physical location and stand in long queues to apply for used car loans. You do not need to visit your lender, fill in a complicated application form, and submit lengthy documents. You can now apply online and enjoy instant approval, and also can compare used car loan rates, fill in your application, upload documents, check credit scores, and calculate EMIs from the comfort of your home.
The best part is that the approved loan amount gets transferred to your registered bank account within hours of approval.
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Flexible repayment terms
Another perk of opting for used car loans is that you can choose the loan amount and the loan tenure based on your needs. However, it is advisable to evaluate your budget and then choose a loan amount that you can afford to pay its EMIs.
Also, you have the luxury of choosing your repayment terms. You can choose to repay your loan amount via post-dated cheques, online payment, or Electronic Clearance Services (ECS).
Minimum documents required
The documents required to apply for a used car loan are a bare minimum, and since you have to upload them online, application processing time has been reduced significantly. You will check with your lender to know about the documents required. Here are the ones that are common across all platforms:
- Identity and address proof: PAN Card, Passport, Driving License, Aadhaar Card (Any one of them)
- Income proof: Bank statement, Salary Slips, Income Tax Returns, or Form 16.
No need for collateral
Unlike other loans, you do not need to submit your assets with considerable value as collateral to get a used car loan. It is completely collateral-free, which means that both salaried and self-employed individuals can opt for a loan without giving anything as security. But, the loan is approved based on income and credit factors. So, you will have to convince your lender that you have a stable income and a healthy credit score.
If you are short of funds and have no means to finance your vehicle, then getting a used car loan is the best option to buy your dream car without putting any burden on your pocket. Before applying for a loan, make sure to assess your needs and avail of a loan based on your EMI affordability.