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The demand for used vehicles and finance for these pre-owned cars has grown tremendously in India, making it one of the largest markets of its kind in the world. With increased disposable income and a growing upper-middle class, many people intend to purchase cars, but prefer to opt for used vehicles that can come for half the price.
Manufacturers and automobile dealers have caught on to the trend and many offer used vehicles with warranty coverage, as well as regular maintenance offers. You should consider all of these factors when planning to purchase a car. Securing a loan for such a purchase is also much easier today, as many lenders offer financing for used cars, because of their increasing demand.
Used car loans differ from new auto loans, as various factors need to be considered, while working out the financial intricacies of the loan. To make sure that you get an affordable used car loan, you need to consider the following:
1. Make sure of your loan eligibility
Salaried applicants must be at least 18 years old and a self-employed borrower must be 21 years. The maximum age of the applicant on loan maturity cannot exceed 60 years (salaried) and 70 years (self-employed). Salaried borrowers must be working at their present company for at least one year, while self-employed applicants must be in business for a minimum of 2 years.
2. Documents that you need to have
When availing a used car loan you will need to submit documentation for address and identity proof. Salaried applicants must provide the latest salary slip along with Form 16 for proof of income, while self-employed applicants must submit copy of their latest income tax returns.
3. Choose the type and model of the car
Applicants must choose the type and model of the vehicle as per their personal needs and financial situation. Most lenders take into account the age of the vehicle before approving the loan. Avoid purchasing a care that is very old to make it easier to get a used vehicle loan. Age of the vehicle will also affect maintenance costs.
4. Determine the amount
After choosing a vehicle, you need to determine the amount you will have to pay. If you are able to make a substantial payment towards your purchase, you can avail a smaller loan amount with affordable installments.
5. Set your requirement
Having understood the loan amount, you must calculate the tenure and the monthly installment. This will mainly depend on your income and calculation of future expenses.
6. Research the different options
Several institutions, such as banks and non-banking finance companies offer used vehicle loans. You can use an online calculator to research the different options and compare these to find the most affordable option
Applicants need to remember that the lenders will send an evaluator to analyze the condition of the vehicle. The lender will also assess the market price for the shortlisted vehicle before taking the final call on the loan amount and the other related terms and conditions.
The interest rate on used vehicle funding is higher as compared to loans for new automobiles. You need to analyze the higher cost before you apply for a loan to ensure you do not face any financial difficulty on account of the loan repayment.
Know more about used car loans and their interest rates at http://www.mahindrafinance.com/used-vehicle-loans.aspx.
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