Numerous benefits of taking a second-hand car loan

Numerous benefits of taking a second-hand car loan

Jan 10, 2022, 5:09:08 AM Business

At one point in your life, you would have surely dreamed of getting your own car. However, finding the right car that fits your budget as well as aspirations is not an easy task. In India, the second-hand car market is flourishing due to affordability and easy availability of second-hand car loan. So, purchasing a used car rather than a new one is a more affordable option. 

 

A second-hand car can be bought with the help of a second-hand car loan. You can easily avail used car finance at attractive interest rates and easy-to-meet eligibility criteria. It comes with a flexible repayment tenure, and certain lenders provide loans of up to 100% of the car’s value.  

 

So, here are some benefits of availing a second-hand car loan.

 

High Loan Amount

Many lenders offer up to 100% financing. It can be highly beneficial as you do not have to spend a penny from your pocket. 

 

Affordable Interest Rates

Second-hand cars are cheaper than a new car. Therefore, the principal amount of the loan will be lower. As a result, the used car loan interest rate will also be lower.

 

Flexible Terms

A used car loan finance is quite flexible as you can choose the loan amount, loan tenure and EMI period. You can also select a payment mode as per your comfort. You can use various payment methods such as online payment, ECS and post-dated cheques to repay the car loan. Generally, the loan amount that is being for a used-car is less when compared to a new car loan. Therefore, the monthly EMIs will be convenient to pay. 

 

Tax Exemption

Another advantage of purchasing a second-hand car through loan is that you can enjoy car loan tax exemption. But keep in mind that car loan tax exemption is only applicable for cars that are for commercial purpose only. 

 

Minimum Paperwork

The entire application process of a used car loan can be completed online. It is quite simple, and minimum paperwork needs to be submitted. Even the required document is fundamental and minimal, making the entire loan application process hassle-free.

 

The Process To Apply for a Second Hand Car Loan

  1. Visit the lender’s website
  2. Fill the application form.
  3. Then, submit the necessary documents to check your eligibility for the loan.

 

Once settled, the loan amount will be transferred to your car dealer.

The eligibility criteria for a second-hand car loan is easy to meet, and it is different for salaried employees and self-employed individuals.

 

For Salaried Employees

  • Age Limit: 21-65 years
  • Income Status: You need to be working in the current organisation for at least a year
  • Monthly Income: At least Rs. 15,000 per month

 

Self-employed Individuals

  • Age Limit: 25-65 years
  • Income Status: You must be in the same line of business for at least three years
  • Income: You must make a profit of at least Rs.1.5 lakh in a year

 

Documents Required For Availing Used Car Loan

 

The documents required to be submitted when applying for a used car loan is mentioned below:

 

  • Application form
  • Passport-size photographs
  • Car valuation report

 

  • Identity Proof (Any of the below-mentioned documents):
  1. Aadhaar Card
  2. PAN Card
  3. Voter’s ID Card
  4. Driving License
  5. Passport

 

  • Address Proof (Any of the below-mentioned documents):
  1. Passport
  2. Aadhaar Card
  3. Voter’s ID
  4. LIC Policy
  5. Electricity Bill
  6. Driving License
  7. Ration Card

 

  • Income Proof:
  1. Profit and loss account
  2. Bank statements
  3. Balance sheet
  4. Audit sheet
  5. Salary slip 

 

Advantages For Buying A Used Car

 

  • Lower insurance 

The rate of insurance is dependent on the car’s age. Newer the car, higher the rate of insurance. So, for a used car, the cost insurance is relatively low.

 

  • Lower Registration charges

The registration charges for a used car is low as the cost of registration depends on the transaction price of the car. Thus, buying a used car reduces the cost of registration.

 

  • Higher inflation

The rate of inflation is increasing. Thus, consumers have to bear the inflation as the high cost is passed on to them. Automobile companies quote a higher price for new cars. To avoid such rising prices, buying a used car is a safer option.

 

Conclusion:

 

Cars are now needed for everyday travel; thus, investing in a pre-owned car is a wise decision. With a used-car loan, it has become much easier to purchase a used car.

 

Published by Doreen Burger

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