How to Apply for a Used Car Loan?: Intro, Documents 2021

How to Apply for a Used Car Loan: While buying a brand-new car might seem like a matter of pride and prestige, a pre-owned car comes with its own set of advantages. With the used car market in India growing by leaps and bounds, you can choose the brand, make and model you want easily. Plus, you need to pay less for a second-hand car when compared to a brand new one, which makes sense if you are saving up for some other life goals. Purchasing a pre-owned car is also hassle-free, thanks to the many financial institutions that offer affordable loans. So, today, you will find out how to get a used car on loan without any hassle.

Choose your Car

 The most important step before applying for a used car loan is to choose the car that suits your needs. The second-hand car market in India is booming currently, thanks to low prices and low depreciation costs. And as you know, during the first few years since a car’s purchase, a chunk of its value gets depreciated. Therefore, buying a used car is a more cost-effective option. Moreover, the insurance cost and registration fees are also low for a used car. 

Since there are so many benefits associated with a used car, borrowers must always explore the various options available in the market before making a choice. You must also inspect the relevant documentation and confirm that the vehicle you intend to buy is free from dents and bruises. It is advisable to avoid a car that has previously met with an accident. If a financial institution discovers that the car you are purchasing is in poor condition, they may reject your loan application.

Apply for a Used Car Loan

Once you have zeroed in on your dream car, the next step involves applying for a second-hand car loan. Unlike the traditional form of lending, now borrowers don’t have to wait for months to get their car loan processed. Nowadays, purchasing a used car on loan is super simple. Financial institutions usually provide an option to apply for a used car loan either online or offline. If you want to go for an online loan application process, you need to follow these steps. 

Step 1– Visit the website of the lender of your choice and go to the used car loan section.

Step 2– Check the eligibility criteria, used car financing rates and read the terms and conditions of a used car loan.

Step 3– Fill in the details on the online application form and click on the submit button. 

However, if you want to apply through an offline mode, you need to visit the branch of your preferred lender. The branch executives will help you with the loan process. Getting a used car loan is not a tough task these days. But it is advisable to explore the various options with different lenders in the market. This will help you get a great deal that suits your pocket. 

Finalise the Used Car Loan Amount

Once you are done with the preceding steps, it’s time to finalise your loan amount. While purchasing a used car on loan, make sure you do not over-borrow. 

Consider the following scenario to understand this better: Say, you have decided to buy a used car with a market value of Rs 5 lacs. When you approach a lender, they tell you that you are eligible for a loan of Rs 10 lacs because you have a good credit history and a good income. So, you decide to borrow Rs 10 lacs to buy another car that has a value equal to your loan amount.

What happens then? Your EMI amount shoots up as a result of your overborrowing, putting further strain on your budget. In this case, there is a chance you will default on your EMI or mess up your budget. In the long run, both situations are unfavourable. Therefore, you should choose the loan amount as per your requirement. 

Submit Relevant Documents

Once you have decided on your loan amount, you need to submit the necessary documents. Your lender will ask you to submit ID and address proof, income proof, such as salary slips or account statement, documents related to your vehicle, such as insurance paper, registration certificate and a few more things that the lender deems appropriate. After the submission of documents, the lender will verify the same. Once they are satisfied, the loan amount will be disbursed to the account of your used car dealer.  

Drive Away

Once the loan amount is disbursed; you can go back to the dealer and ask for the keys to your dream car. 

To Conclude

Purchasing a used car on loan is a simple and convenient process, as you know by now. You only have to check your eligibility, keep the relevant documents handy and follow a few simple steps, after which the lender will immediately disburse the loan amount. 

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