What is a pre-owned car loan and how to apply for it? | Mint

With the popularity of used cars in India, a lot of opportunities are waiting to be financed. A pre-owned car loan is simply to provide financial support and fund individuals purchasing second hand vehicles.

Below is the complete overview of what pre-owned car loans are and how to apply for them.

What is a pre-owned car loan?

A pre-owned car loan is a form of financing that enables you to buy a used car. As opposed to personal loans, which are used for other expenses, pre-owned car loans are used to enable the buying of used cars. Pre-owned car loans are defined by low interest rates and flexible repayment terms.

What do I need to apply for a pre-owned car loan?

The conditions will vary depending on the lender but will usually be:

• Age: The applicant’s age must be 21 to 65 years.
• Income: The applicant should be having a stable income, with a stable income history.
• Credit Score: Good credit score (usually above 675) increases your chances of approval.
• Employment Status: Both salaried and self-employed applicants are eligible.
• Consistency of credit profile: Consistency here is key i.e., in both income and credit profiling the record needs to be clean.

How do I get a pre-owned car loan?
 

Getting a pre-owned car loan is easy:

• Search for reputable lenders: Shortlist some banks and non-banking finance companies (NBFCs) and shortlist based on interest rates and terms.
• Verify eligibility: Determine if you are eligible as per the terms of the lender.
• Document collection: Collect documents such as proof of identity, income proof, residence proof, and vehicle details to be bought.
• Online or branch visit application: Fill up the online application form or visit a bank branch and provide the application with documents.
• Loan sanction: Your loan will be sanctioned by the lender after verification and amount credited.
• Clear doubts: If in doubt reach out to the respective customer support executive or NBFC branch. Understanding the complete terms and conditions is crucial here.

What are the advantages of a pre-owned car loan?

Used car loans also possess some advantages such as lower principal sizes for new car loans, flexible payment structures within a time horizon of 12 to 84 months, and fast approval processes. They also make the purchase buyers the owners of the car without full payment at purchase.

To conclude, used car loans are an affordable means by which people in India can finance their car acquisition with convenient repayment terms and low interest.