Many individuals choose to buy pre-owned cars or used cars due to several reasons. These vehicles are available at a lower price tag and therefore a person who has just started driving would prefer a used car. Even though pre-owned cars are cheaper than new vehicles, it is likely that you may not have the entire amount required to make the purchase. Several financial institutions offer user car loans to enable you to purchase used cars without any difficulties.
If you are considering availing of a used car loan, it will be beneficial to understand more about such credit facilities. Here are five factors to consider about pre-owned vehicle loans.
- Amount of loan disbursed
Lenders generally finance up to 80% of the value of the cars. This means you need to pay at least 20% of the purchase price as the down payment. Therefore, ensuring that the down payment amount is available before opting for a loan is recommended.
- Your age
To apply for a used car loan, you must be at least 21 years old. Also, the maximum age at the time of repayment must be 65 years. You may apply for the loan if you are a salaried or a self-employed professional.
- Age of the vehicle
Most financial institutions provide such loans for a tenure of three years or five years in some cases. To determine the duration of the loan tenure, lenders generally consider the age of the vehicle. The car must not be over 10 years old at the end of the loan repayment period. Therefore, it is important to keep this factor in mind when you search for a pre-owned car.
- Repayment options
You may choose between one year and five years to repay the used car loan. Furthermore, lenders provide different repayment alternatives, such as flexible Equated Monthly Installments (EMIs) and partial prepayment of the outstanding loan amount. This ensures you do not face financial difficulties while repaying the loan.
- Documentation requirements
Documents required to apply for a used car loan varies based on your applicant status (salaried or self-employed). However, here are some of the common documents you are required to submit along with one or two recent photographs.
- Income proof
Salary slip, Form 16, and bank account statements
- Age proof
Any document, such as Voters ID card, driving license, school leaving certificate, passport copy, or Permanent Account Number (PAN) card
- Residence proof
You may provide any document like telephone or electricity bill, credit card statement, or passport
- Identity proof
This may be either a PAN card, ration card with date of birth, or driving license
- Signature verification
You may procure the signature verification form and submit the same to your lender
It is advisable that you purchase the vehicle through a reputed and certified pre-owned car dealer. Such dealers will conduct a thorough check on the condition of the different vehicles before putting these up for sale. Furthermore, lenders will be more willing to provide loans when you buy from a certified dealer.
