Want a used car? Here's how to apply for loan
What's the story
Buying a pre-owned car in India could be a cost-effective alternative to investing in a brand-new one.
However, the process of selecting the right one isn't as easy as it sounds.
You will also have to consider factors like age and condition of the vehicle while applying for loans from banks or NBFCs (non-banking financial companies).
Here's all you need to know.
Step #1
Purchase directly or via dealers
You can purchase a used car directly from the owner or through a reseller/dealer.
If you opt for the latter, some banks and NBFCs may give you discounted interest rates on used cars.
The dealer will take care of all the paperwork and assist you in getting a loan from their associated lenders.
But, if you buy directly from an owner, you'll have to do everything yourself.
Step #2
Plan your budget
Before applying for a used car loan, you should plan your budget. Decide how much money you can afford to spend on the vehicle.
It is best to go for a car loan that won't weigh down your financial health and can be paid off easily.
This way, you won't fall into debt or face any financial difficulties in the future.
Step #3
Check vehicle's age and condition
While choosing a used car, make sure to check its age and condition.
The vehicle should be in a decent shape with minimal maintenance requirements.
Also, it shouldn't be older than seven years as lenders take the car's age into account before approving a loan.
This will save you from any recurring issues or high repair costs in the future.
Step #4
Choose the right lender
Once you've zeroed in on a used car, it's time to pick the right lender for your loan.
Compare multiple lenders on the basis of interest rates, processing fees, repayment tenure, etc. This will help you find the best deal that fits your needs.
Don't forget to check the eligibility criteria and terms of each lender before making a decision.
Step #5
Submit documents
After choosing a lender, you'll have to submit a bunch of documents to apply for a used car loan.
These could include identity proof, address proof, income proof, invoice or bill of sale from the seller, a copy of the vehicle's registration certificate (RC), and motor insurance policy from the seller.
Ensure all documents are accurate and up-to-date before submission.