Full Guide about Used or Old Car Finance

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Just like the increasing demand for used cars, there has been a simultaneous rise in increasing needs of financing for such purchases too. Many lending institutions thus provide dedicated used car finance to help individuals raise the necessary funds for vehicle purchase. Thanks to the high financing value that these loans provide, one can easily purchase his or her desired used car, even if it seems costly and out of budget.

These second-hand car loans are similar to traditional car loans, albeit they are tailored to meet one’s financing needs for a used car purchase. They come with various peripheral details that one must be aware of before diving in to apply for the loan. Below given is a detailed guide on the essential things you must be aware of related to used car loans for a well-informed borrowing decision.

Top Features of Second Hand Car Loans

Lenders extend various attractive features and benefits on used car finance to make loan management hassle-free and convenient for borrowers. Here are some of the most popular ones.

  • Despite a high financing availability, the total loan remains under the financing value for new cars. It allows you to keep the EMIs in check, thus easing loan repayment.
  • With some of the best lenders, you can easily avail a used car loan of up to Rs.50 lakh to purchase your desired used car model.
  • The repayment tenures for these loans are usually available over an extended period of 5 to 7 years, which means you get a long term to service these loans as per your affordability.
  • With the right lending institution and on meeting required eligibility, you can avail as much as 100% of the car’s resale value as financing for vehicle purchase.
  • You can apply for a used car loan online in a few simple steps from the comfort of your home. It doesn’t even require you to step out for document submission as the lender representative would visit you for it.
  • Only a few documents need to be submitted as proof of your eligibility for availing the loan.
  • When purchasing a used car through financing, the depreciation rate along with cost of insurance purchase are usually lower than that for a new car, making the loan more affordable.

However, there are a few things you need to be careful about too when availing of a used car loan to ensure you receive maximum benefits of purchase financing. They include the following.

  • Interest rates on second hand car financing are often higher than loans for new cars due to the increased inherent risk of depreciation and other damages involved.
  • You must check if the car is less than 3 years old or not, or you risk the chances of being denied a used car loan. If provided, you might not be able to secure favourable terms on the advance.
  • In the case of used car loans, the lending institution does not cover the cost of insurance purchase. Hence, you would need to arrange for the necessary finances beforehand.

Application Process to Avail a Used car Loan

You can apply both online and offline to avail used car finance, although the online process is much simpler and faster. Here are the steps to follow once you have selected the second-hand car to purchase and decided on your loan amount and tenure.

Step 1: Visit the official website of your lender and navigate to the page dedicated to used car loans.

Step 2: Next, click on the ‘apply now or ‘online application’ option, as available, to access your online application form.

Step 3: Once redirected to your application form, you can start filling in your personal and financial details. Proceed to fill in the loan amount needed and a suitable tenure. Make sure to check the accuracy of all the entries for hassle-free loan application processing.

Step 4: Submit the required details online.

Step 5: Complete your application by submitting the form.

Once submitted, the loan application will undergo assessment and the loan will be approved after due verification. If all your details are in place, it may take just a few minutes for the approval to come by. Following this, the loan amount is also disbursed in the coming 24 hours.

You can simplify your application processing experience with the following tips in mind.

  • Compare available lenders to arrive at the most affordable loan offer at competitive rates. Also, negotiate with the lender for rate reduction based on your eligibility.
  • Use a dedicated EMI calculator to plan for your loan suitability and repayment. It allows you to select a suitable loan amount and a tenure that keeps the EMIs within your repayment capacity, so your personal finances are not strained for meeting the repayment liability.
  • Make sure you select a reputed lender to borrow from so that there are minimal delays in loan processing and all the steps are streamlined.
  • Arrange all required documents and keep them handy before applying so that the application process is fast-tracked.

Things to Take Care of Before a Second-Hand Car Purchase

As the purchase of a used car comes with ownership transfer along with multiple paperwork requirements, you must check a few things to ensure hassle-free purchase and ownership of the vehicle. Following are the things to verify.

  1. Make sure that you have checked the car’s condition with the help of a technician. Any issue found shall be conveyed to the previous owner for price negotiation.
  2. Match the important details mentioned on vehicle RC and insurance certificate like engine and chassis number with actual prints on the parts. Also, confirm if the car had been involved in any previous accidents or thefts before arriving at final valuation.

You must also complete RC and insurance transfer during the purchase to claim complete ownership of the vehicle for necessary financing.

If there are any issues with the vehicle, such as fluid leakage or rust, you must get them serviced before initiating the final purchase and applying for the loan. Doing so shall ensure you do not have to pay anything from your pocket after the purchase has been completed with the available used car finance.

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