By 
Buying a car is the dream of a million youngsters, and not everyone can afford to buy a brand new four-wheeler. As more people are purchasing cars, a lot of them are switching to a new car after selling an old one. These used cars are sold at an affordable price and can fulfil the dream of many. With so many people buying used four-wheelers every day, it has become more accessible for people to get a used car loan.
In this guide for a second-hand car loan, we will cover all the essential things you need to know while applying for a used car loan. It will help you understand how to choose the right loan and the procedure to apply.
How is a used car loan different from a new car loan?
Lenders offer loans for a used car and a new car separately. The primary difference between the two is that the age of the used vehicle plays a crucial role in determining the loan amount.
Usually, you can avail 60% to 80% value of the car depending on the condition and age. Moreover, the second-hand car loan interest rate is around 2% to 4% higher when compared to a new car loan.
Things to keep in check when you apply for a used car loan:
- Age of the car and its model plays a crucial role in your loan application. If the car model is phased out by the manufacturer or if its age crosses four years, then it will get difficult for you to secure a second-hand car loan.
- The bank’s evaluator will determine the current value of your car, and the loan amount will be decided according to the final estimate made by the bank.
- It’s better to apply with a bank as NBFCs might charge much higher interest rates on used car loans as compared to traditional banks.
- Check for the amount you have to pay to avail the loan. Typically, you would be required to pay a processing fee of 0.5% on the loan amount and make 20% to 40% down payment depending on your lender.
- You might not get a waiver of prepayment penalties when you secure a loan for a used car, and the final interest rate will depend on your credit history and relationship with your bank.
Here’s how you can apply for a second-hand car loan online?
Used car loan financing and 2 wheeler loan is more accessible today with the help of your lenders’ online loan portal. You can compare interest rates, fees applicable, and your liabilities online. To apply for the loan, make sure you have all the required documents, and check your eligibility for the loan. Fill the application and attach the papers, and the lender will start verification instantly.
Conclusion:
Getting a second-hand car loan is more accessible now as the number of old cars on sale is increasing every day. More people like to opt for an EMI option as it is difficult for many to pay the full amount for a car in one go. You can apply for the loan anytime by submitting the documents along with the loan application, and your lender will start the evaluation process.
