Most lending institutions, including top NBFCs, today provide financing to assist individuals in purchasing their desired used cars. While the terms of lending vary from one financial institution to another, the total available financing can reach a high ratio at 80% of the used car’s resale value.
When seeking suitable finance for second hand car, you must take care of a few essential aspects related to the funding option. Knowing them should help you make an informed decision on the suitable financing for second hand car purchase. For instance, knowing whether the age of a car affects your borrowing capacity or not is essential for successful financing of your vehicle’s purchase. Below given are some such important steps you must take to arrange funding for second hand car purchase.
Select a Suitable Lender and Enquire
The first step to finding the right financing option for your used car purchase is to look for the right lender. You can make a lender selection based on the loan facilities available, such as the approval and disbursal period, eligibility criteria, document requirement, etc.
You must also check the interest rate applicable and other charges levied when arranging finance for second hand car purchases. It would help determine the total affordability of your used car loan.
Know the Differences between Used Car and New Car Loan
You must also know the primary differences between a used car loan and financing for a new car. The primary points of difference between the two revolve around the interest rate applicable and the LTV sanctioned.
While interest rate can be a notch higher for used car loans than for the new ones, LTV offered by the lender is usually low due to the increase risk involved. One of the smart ways to secure the loan conveniently is to make a higher down payment when availing a used car loan and reduce the LTV consequently to avail necessary funding.
Decide on Your Second Hand Car Loan
Once you have considered these factors, you can finally estimate the actual loan amount you require as finance for second hand car purchase. Select the amount based on your repayment capacity and financial standing. You would also need to decide on a suitable tenure for loan repayment. Make sure to choose the tenure carefully as it will significantly impact the total interest payable, the monthly EMIs payable and the total loan liability.
Use an EMI calculator to estimate a suitable installment and the consequent loan amount as well as tenure for informed decision-making.
Having decided the initials of your loan requirement with the selected lender, you can now proceed to complete your application process. You can either select to apply for the loan online or through offline mode with the lender. However, to experience hassle-free application processing and quick approval, eligible candidates should opt to go online.
Submit All Required Documents
Complete your application verification with the necessary document submission with the lender. Note that the documents required include paperwork based on your lender’s eligibility criteria, whereby the proofs of income and occupation differ with the salaried and self-employed applicants.
Keep all the necessary documents ready before applying for the finance for second hand car to avoid any last-minute hassle. Provide al income documents to negotiate for the best rates on your loan to negotiate for the most affordable financing option.