As the automobile industry is flourishing so is the trend to go for used cars. It is also seen that with the increasing demand for the used cars, a large number of lenders have come into play both in government banks and private financing firms. The market for used cars is thriving in India. The term used cars refer to the vehicle that is being sold for more than one time.
Some people believe that taking finance for a used car is tougher than obtaining finance on a new car. Around 70% to 80% of cost of the used cars is financed by the bank while in the case of a new car; this figure goes up to 90%. But there are ways with which you can get loans for used cars at the best interest rate and extended terms.
Reasons behind the growth of the used car market
- Buying a used car I much more affordable and economical than going for a brand new car.
- It reduces the ownership period.
- By opting this deal, you can own more than one car
- The perception of people is changing towards buying a used car post-pandemic.
- There has been an increase in the ownership of cars due to cab services.
- It is easier to get finance on a second-hand car.
Things to consider when you apply for used car finance
- Interest Rates- Conduct proper research on different loan providers in your area. Choose the best deal that suits your requirements.
- Documentation- The lender would want to make sure that all your documents including the registration certificate are clean or not.
- Loan tenure- Many lenders have an EMI calculator tool that helps them calculate the amount you have to pay every month. It is better to try various combinations of the loan amount, interest rates, and tenure.
- Valuations of the vehicle- Estimate the resale value of the used car. Here you need to make a note of a number of kilometers driven, the profile of the user, accidents, etc.
- Loan process and fees- Lenders charge a processing fee for loan applications and for doing all paperwork.
Getting easy loans for used cars
When you apply for loans regarding used cars, you need to make some considerations related to the type and basic requirements for the loan. Refer to the given steps below that can help you to get easy finance on your used car.
- Choosing the model and the type of car you want to buy
This is the first and the foremost requirement. You need to select the model and type of car that matches your requirement and also fits in your budget bracket. It is also seen that most car finance companies and banks consider the age and the type of car before they provide you a loan on the same.
- Calculate the amount for your car
Once you are sure of the model that you want to buy, you should now calculate the amount that needs to be paid. If you think you are in a position to pay a lump sum amount in advance, then you can apply for a small loan that comes with an easy installment scheme. The amount calculation is another important step and it gives you an idea about the required finance for used cars.
- Set your requirements
Once you have decided the model of the car and you are done with the calculation, you now need to determine the loan term and monthly installments. Your monthly income and future calculations play a major role here.
- Look for the available options
In India, there are many government banks as well as private banks and institutions that offer loans for used cars. Some of the most popular financing organizations are ICICI Bank, HDFC Bank, Kotak Mahindra, SBI, and Axis Bank. Your role is to look for these organistions and compare the loan deals offered by each one of them so that you can choose the best one possible.
- Submitting the documents
All financial institutions and banks demand authorization and proof so that they can ensure your income stability. Different banks have different documentation requirements. So, you can check with the bank that you finalize their documentation requirements. You will become eligible for the car loan once you have submitted all the documents and they are verified.
It is seen that most financial institutions claim that there has been a rise of around 12 to 18% in the loans for used cars in the automobile industry. The dynamics have majorly changed post Covid situation because people don’t want spend too much money but want to come under the category of car owners. Going for an old car is the best solution in such a case.