5 Tips You Must Know About Used Car Loan

According to recent studies, the used car market in India is valued at approximately Rs. 1 lakh crore. A growing number of people are opting for affordable, yet serviceable automobiles for their daily use. The trade of second-hand hatchbacks, family sedans, and even SUVs have increased by almost 40% to 50% as of 2018-19. 

A significant number of these buyers hail from the middle and upper-middle-income group. An increase in individual household income and availability of a second hand car loan have fuelled the number of people opting to buy a used vehicle with the help of financing.

However, before availing a personal loan for a used car, a borrower should keep in mind a few factors regarding these types of credits. Unlike a car loan, where the vehicle is hypothecated to the financial institutions, these unsecured loans do not require pledging any collateral against the disbursed amount. That introduces several different factors into the entire process.

Let’s Take a Look at 5 Tips a Borrower Should Know About a Loan to Purchase Used Cars.

• These Are Unsecured Loans – Used car loans are distributed as personal loans that borrowers can utilize to finance the purchases. These types of credits do not require pledging any collateral which makes them hassle-free and convenient to avail. Certain financial institutions offer a substantial sum of money to finance any purchase.  One can avail up to Rs. 25 Lakh as a credit if they fulfill all the eligibility criteria of availing a personal loan.

• Credit Score Plays An Important Role – An applicant’s credit score plays a crucial part in determining his/her eligibility. Lenders thoroughly assess prospective borrowers’ credit history and credit ratings when they apply for a used car loan. A high credit rating usually signifies that the individual has a history of timely repayments and no defaulting. It indicates that the applicant is more creditworthy and of lower risk to the lender. Usually, a score of 750 or higher is preferred by financial institutions offering such credits.

• Borrowers Can Enjoy Significant Flexibility – Lenders often offer significant flexibility to borrowers applying for a used car loan. They can opt for a suitable tenor, usually ranging from 12 to 60 months, according to their repayment capability. Companies like Bajaj Finserv also provide flexi loan facility, which allows an individual to borrow the exact amount they require from a pre-sanctioned limit. The interest will be charged only on the withdrawn amount instead of the allocated loan, which can reduce the EMIs by a significant margin. Prospective borrowers can use a loan EMI calculator to determine the payable installment before availing a credit.

• They Are Approved Within a Short Time – The process to avail a loan to purchase used cars is simple and hassle-free, allowing a lender to complete the approval process and disburse the funds within a short timeframe. Lenders like Bajaj Finserv offers instant verification and loan disbursal within 24 hours of document verification for used car loans. They also provide pre-approved offers that make the entire process of availing a credit simpler. Such offers are available on numerous financial products, including unsecured credits like personal loans, business loans, and secured advances like home loans. A borrower has to share only some essential details such as name and contact details to check their pre-approved offer.

• Most Lenders Ask For Simple Eligibility – An easy-to-meet eligibility criteria and minimum documentation requisites make these types of credits easy to avail for everyone. Any residing citizen of India, working as a salaried employee with an MNC, public, or private company can apply for a used car loan. The documents required for Bajaj finserv personal loan include KYC papers, proof of employment, and proof of income.

Loans to purchase a second-hand car has become significantly popular with the increasing demand for personal transport. With borrower-friendly policies, affordable personal loan interest rates, and transparent process, they have become the main source of financing such a purchase.