Used Car Loan: Everything You Need to Know

In the 2020s, owning a car is not unusual anymore. Cars are more affordable and many people have several cars in their fleet. The average Indian family owns a car which can be used for different purposes. The trend of owning two cars has become popular among middle class families across all classes.

You may be asking yourself how you can afford to purchase a new or used car. Simply put, it has become much easier than it used to be. Thanks to an increase in credit financing, there is now plenty of money available for loans and EMIs. For example, many banks offer loans with no more documentation than an address and phone number. This helps accelerate the process of buying a car and reduce paperwork so that it can be easily financed.

What is a Used Car Loan?

A used car loan is a loan that can be taken out by some financial institutions. The loan amount depends on the age and health of the car as well as its value that the lender arrives at. The total duration of the loan may range from 1-7 years. The interest rate on the loan depends on your credit score and car itself. If your credit score is high then you will be able to get a better rate while if it is low, then you may end up paying more than you would have needed

If you are looking to finance a car, then it is important that you look into the different kinds of loan options available. Going for the fastest route using a used car will cost less, but this option comes with several challenges. The rates of interest on such loans are higher than those of new cars and there are factors like insurance and booking cost that might be overlooked. To help you make a wise decision about the loan amount required for a car purchase, we list down some of the most common options available with corresponding advantages and disadvantages.

What is the benefit of applying for a used car loan?

Used car loans are chock-full of benefits and there are a few simple steps to follow. Used car loans are usually available for people who want to purchase a car that is used. Before availing a car loan, one should be aware about several regulations pertaining to selling the vehicle:

• Since the actual amount required to buy a used car is less than a new car, the loan amount necessary would also be less, hence lower EMIs. 
• Flexible repayment tenures are provided.
• Some banks or non-banking financial institutions give up to 100% of the required loan.
• Minimum paperwork with uncomplicated processing. 
• Instant approval and disbursement with attractive interest rates.
• Used car loans carry a lot of features like the new car loan, but the hassle to get it is much lesser.

How to Apply for a Used Car Loan?

The car loan is perfect for those who want to buy a car but don’t have enough credit history to qualify for a regular loan. It gives you the flexibility of choosing the best loan for your needs, as it can be tailored to suit your credit score and other requirements, such as being between the age of 21 and 65 years and having a higher income or depending on self-employment income.

When it comes to buying a used car, you need to look up for the right type of used car finance. You could ask your bank to help you out by offering you a low-interest rate on a used car loan. But with minimal documentation and quick disbursal, applying for a used car loan is the best solution to own a used car of your choice.