Benefits like flexible tenure and EMI, fast loan disbursal, and a high LTV with minimal paperwork are driving the used car loan market growth. The Indian Used Car Loan Market is anticipated to reach around US$16 billion by FY2027, growing at a CAGR of 11% in value terms.
A large customer base, better customer service, and competitive loan rates make NBFCs the major dominators for used car loans. The presence of NBFCs in non-metro locations has increased the NBFC market share in recent years.
An individual can get up to 95% finance for used cars online with hassle-free processing and minimal documentation. A high credit score can provide you with a loan at a lower interest rate, making a second-hand car loan the best financing option. Let us elaborate on the key benefits of used car loans.
Advantages of Used Car Loans
Following are the key benefits and features of a used car loan:
Low Down Payment
Low down payment facility suits the customers’ financial requirements. A lender can offer as high as 95% of the car’s Insurance Declared Value (IDV). The borrower needs to pay only a small amount as the down payment, making a used car loan pocket-friendly. Still, you can think about making a large down payment to reduce the financial burden of the loan in a shorter tenure.
Numerous Options
You can buy your dream car under pre-owned car loans. A used car loan covers various cars, including MUVs and SUVs. Loans are available for vehicles up to 10 years old, depending on the lender. There are special schemes with reputed NBFCs to suit your needs.
High Loan Amount of Up To 95%; 100% for Specific Models
The loan amount a lender offers to a loan applicant depends on the car’s age, model, and parts’ condition. An individual can buy a pre-owned/second-hand car against an NBFC loan offering up to 95% of the car’s IDV. The applicant’s credit history and past relations with the lender are also considered while determining the loan amount. A few reputed lenders like Muthoot Capital can provide loans up to 100% for specific models under specific schemes.
Affordable Loan Cost
A pre-owned car can be financed at a competitive rate with reputable NBFCs. Used car loans start from as low as 8.99%. The interest rate depends on several factors the lender considers, including the age of the car, loan tenure, applicant monthly income, etc. An individual can lower the loan interest rate with a good credit history and a high CIBIL score of 750+. It is better to prefer a newer pre-owned car, say one or two-year-old, over a four-year-old car to approve a loan at a lower interest rate. Also, a shorter-term loan can come with a lower interest rate as compared to a longer-term loan.
No Income Base Loan Option
Individuals looking for used car loans can be benefited from vehicle loans under no income base, income, and asset proof base, depending on their used car loan eligibility with a lending institution. Lenders do not ask for income proof under no income base loans.
Quick approval
NBFCs offer a car loan against easy documentation to make the process hassle-free and quickly provide finance to customers. You can apply online to get quick loan approval for your second-hand car.
Flexible loan repayment options
A pre-owned car loan is also popular for flexible repayment options. A borrower can choose tenure between 12 and 60 months and repay the car loan in easy EMIs. A used car loan saves you from unnecessary financial burden due to the one-time payment.
Used Car Loan Eligibility Check
An individual needs to fulfill only a few conditions after which a car loan can be processed:
- The applicant should be a salaried/self-employed person/agriculturist.
- The minimum age limit of the applicant while submitting the loan application should be 21 years. The maximum age limit to repay the loan is 65 years.
- The applicant’s monthly salary should be 15,000 or a net profit of Rs.1.5 lakhs annually.
Conclusion
An individual need not save the entire value of a used car. Simply apply for a used car loan and repay the loan amount in easy EMIs over the loan tenure. Make it more pocket-friendly with a high credit score. Thus, used car finance is the best option to buy your pre-owned car.
