Cars are a new kind of joy-rides on roads. A car helps a family to come together during outings, helps you to save a lot of time and money on daily basis. But amongst all, car is a device made for convenience and is considered as a mark of social status. Everyone desires to buy a car of their dreams one day but often fail to do so as many fall short on funds. They cannot buy a brand new car of their dreams just because they can’t get the desired funds in time. For such situations, one can easily get used car loan to buy a car of their dreams. You can buy a luxurious car paying not its purchase value but its current value on roads based on the evaluation and condition of the car.
Many banks and NBFCs have succeeded in making a number of Indians’ dream come true by offering them a used car loan. It has become easy to get such a loan and bring your dream vehicle home. But before you apply for a used car loan to bank or NBFC, we suggest you to ask these 7 questions to yourself:
Q1: What interest rate I’ll be paying for my used car loan?
Ans.: Just like any other loans, interest rates are an important component of used car loan too. The interest rate differs from lender to lender. It’s decided as per the policy terms of the lender and the profile of the borrower. Interest rate for used car loan usually starts from 15.50%*. If you have a strong credit score and have the ability to repay the loan on time without any defaults, banks or NBFC may negotiate the interest rate with you. Remember, the more interest rate you agree to, the more loan amount you will have to repay.
Q2: How much loan amount will I get from the bank or NBFC?
Ans. Used car loan is availed by banks and NBFCs to help their customers so that they can buy luxurious cars. First, you have to determine which car you want to buy and how much amount you will require to take as a loan from a bank or NBFC. Usually banks approve 80% to 90% of the loan amount from the required loan amount to buy a used car. Other than that, the remaining amount is paid by the loan borrower. So know exactly how much your bank or NBFC will fund you through your used car loan.
Q3: Exactly how much I’ll be paying for my car?
Ans.: Though a bank or NBFC will finance you to buy a luxurious used car, you may have to pay many other additional charges. These charges include down payment of your car, loan processing fees, late charges, default payments charges, prepayment, foreclosure, documentation etc. Before you sign any loan related documents, be sure that you are aware of all these charges you may have to pay while taking, repaying and closing the loan.
Q4: How much should I pay as down payment for my used car loan and what tenure should I choose?
Ans.: As told earlier, banks and NBFCs approve 80% to 100% of loan amount required for used car loan. The remaining goes as a down payment for your car purchase. The more amounts you pay as down payment, the less you have to borrow thus you repay even lesser amount. It also shortens your loan repayment tenure. So we suggest you to pay a minimum of 20% as your used car down payment and rest take as a loan. The tenure to pay back this loan ranges from 5 to 7 years. Many banks and NBFCs offer flexible loan tenures. If you choose smaller loan tenure, you will be paying higher EMIs but for longer tenure you will be paying smaller EMIs and may end up paying more interest rate.
Q5: What additional fees I may have to pay while taking a used car loan?
Ans.: Besides from interest rate and principal loan amount, the loan borrower has to pay many additional charges while taking a used car loan. You will have to pay for processing fee, documentation charges, credit report charges, registration certificate collection charges, stamp duty, part prepayment charges, foreclosure charges, late payment charges, amortization schedule charges, loan cancellation charges, swap charges, bounce charges, etc.
Q6: Can I prepay my used car loan?
Ans.: Banks and NBFCs offer flexible loan repayment and prepayment terms. You can pay back your used car loan according to these terms. Many believe in paying back a loan ahead of its tenure end as they want to be debt free sooner than later. You can prepay you loan but beware of prepayment charges. Banks and NBFCs charge a minimum amount for loan prepayment. Many also levy these charges for their customers. All these are mentioned in your loan agreement. So know about your used car loan prepayment terms before signing the loan agreement.
Q7: What documents will I require to submit to get a quick used car loan from Ruloans?
Ans.: Getting a used car loan has become easier from the moment Ruloans started their online application process. One can easily upload the required documents online and get quick approval on your used car loan. You will require submitting your KYC details, banks statements, Form 16/ business proof, ITR details, income stability proof etc.
Click here to know more about used car loan.