When automobile industry is dogging sales upheavals, the used car market is booming with tremendous growth. The pre-owned car market gained traction late, but now major players like Maruti Suzuki India and Mahindra are working on establishing their used car business in India. With the increasing demand for the used cars, a large number of lenders, both in government banks and private financing firms, are financing pre-owned cars.
Obtaining used cars loans in India is tougher than the new car loans. Banks, usually, offer 70-80% cost of the used cars, while it’s up to 90% for the new cars. Even the interest rates are higher and loan terms are shorter for the used car loan. However, there are ways to get the used car loan at best interest rate and extended term.
How to finance for used cars?
While taking finance for a used car, one needs to consider the type and basic requirements for the loan. Following steps will help you obtain a loan for a pre-owned car.
Choose the model and type of the car: First and foremost, select the model and type of the car that meet your needs and still fits into your budget. Most banks and car finance companies consider the age and type of the car model before providing a loan. Therefore, choosing a relatively newer model will help borrowers to get used car loans.
Sum-up the amount for your car: Once you finalize the car model, calculate the amount that needs to be paid. If you can afford to pay lump sum advance money, then you can apply for small loan with easy installment scheme. The amount calculation will get you an idea about the required finance for used cars.
Set your requirement: After deciding on the loan amount, determine the loan term and monthly installments. Usually, it depends on your monthly income and future calculations.
Search for the available options: There are several government and private banks and institutions that finance cars in India. ICICI Bank, HDFC, Axis Bank, Kotak Mahindra and SBI are some popular financing organizations. By comparing the available options and loan deals, you can select the best one for you.
Submit the documents after verification: All banks and financing institutions demand authorization and proofs for ensuring income stability of a borrower. You can ask for the required documentation, as it varies from bank to bank. Once borrowers submit all the required documents, they become eligible for used car loans in India.
