Loan to Buy a Pre-Owned Car

How To Get a Loan to Buy a Pre-Owned Car?

Yes, you can easily apply for a loan to get a second-hand vehicle of your selection. Such loans come with attractive interest rates and flexible repayment tenure of up to 5 years. The loans can be provided up to 100% of the quoted value of the vehicle or as per your eligibility. If you have a lower credit score, you can file for an instant car loan with a co-applicant who has a higher score to increase your loan approval chances.

The best thing is that there is no need for collateral for a second-hand car loan because the car works as security. The insurance costs and rate of depreciation are less than a new car. Here are the steps to get a loan to purchase a pre-owned car:

  • Check the lenders, do proper research on interest rates/ time and perform a comparative study

First, you should check if the lender offers pre-owned car loans. If yes, you should find out if you are eligible for the loan. Some lenders do not finance second-hand cars older than three years. 

Visit the lender’s website or offline to file the pre-owned car loan application. If you are filing online, research thoroughly to avail the best interest rate. You should compare deals offered by various lending companies. Some lenders may ask the borrower to pay 10 – 30% of the cost and finance the rest.

  • Narrow down the best pre-owned car loan and go for it

After you have shortlisted the lenders, acquired details for eligibility, payment, interest rates, processing fee, and calculated the monthly installments, you can derive a conclusion about which lender works best for you.

Keep a note that the interest rates of second-hand cars are greater with a lower loan-to-value ratio than a new car loan. The loan amount depends on the valuation the lender has arrived at. Sometimes, the loan amount can be lower than the price of the car. While the loan can be sanctioned for up to five years, the tenure majorly depends on the car’s age.

Second-hand car loan eligibility is more if the LTV ratio is less. You have better chances of getting a loan if the LTV ratio is low, and you can also bargain for a higher tenure.

  • Loan amount

Usually, the loan amount is 70% to 95% of the second-hand car’s value arrived after the valuation procedure or depending on the insured value. If the value of the used car is lower than its purchase cost, you will have to pay the rest of the amount.

  • Interest rates

The interest rate varies from one lender to another and depends on your credit history, car value, age, amount of loan, and time. 

  • Applying for the loan offline or online

The procedure for an instant car loan can be quickly done online. There is minimum paperwork needed, and once your loan is sanctioned, you can get the amount in your account within a few days. 

  • Ownership

Meanwhile, you can make the down payment to the seller and take possession. 

Eligibility Criteria

The eligibility criteria for self-employed and salaried people may differ:

  • A salaried person should have an income above 8000 per month and must be working for the current company for a year.
  • A self-employed person should earn INR 1.2 lakh annually and be in the business line for the past three years.

Documents needed

You to need to fill in the application form and car valuation report to apply for a used car loan. The identity proofs needed are an Aadhaar card, Passport, PAN card, Driving license, and Address proof along with Salary slips, Balance sheet, or Bank account statements.

Some additional points to consider when buying pre-owned cars:

  • Check if all the original documentation is in place. Sometimes the lender may need a Car Registration Certificate to be pledged as collateral.
  • When purchasing an inter-state car, ensure the seller has a state of registration office NOC to conduct the registration in your state.
  • Complete the transfer procedure immediately after purchasing the car.
  • Check if you are eligible for lower interest rates and personal loan apply. If you have a good credit score, it is important to apply for a better personal loan interest rate and use the money to purchase a used car. It is feasible because your loan eligibility doesn’t depend on the car valuation. The loan can be sanctioned within 24-48 hours of applying.

Wrapping Up

Buying a second-hand car on loan has become quite common these days. However, it is important to analyze the best loan options for you and pick the right one to boost your experience. At Early Salary, we offer the best pre-owned car loans for everyone. We offer instant personal loans up to 5 lakhs at highly competitive interest rates. So, go ahead and fill out your application now to bring home your dream machine! In addition to loans, you should also look for coupon codes for cars to save money on car purchases.