Getting a loan for a second-hand car is easier than you think. With several banks, NBFCs, and other financial institutions it’s not difficult to avail a loan for a used car. The procedure for applying for such loans is hassle-free and you can even apply for such loans online. Online application is convenient for a lot of people as you don’t have to wait for long hours to meet the financer and avail of the loan from the comfort of your home. However, before you apply for a loan to finance it there are a number of things that need your attention and consideration.
Here is a list of important things that must be kept in mind when applying for loans to avail
- The interest rate of loans for used cars is higher than that of brand new cars. While applying for a loan for a used car please consider the interest rate.
- If the car you are contemplating buying is older than a period of three years certain banks, NBFCs, and other financial institutions might not consider it eligible for availing a loan.
- The loan amount does not in any way cover the insurance cost.
Few other relevant questions in this regard:
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Is any security or collateral needs to be provided for obtaining a used car loan?
The car itself acts as a security and no other collateral needs to be provided. In case you are unable to repay the loan the amount can be recovered by the lender by handing over your car.
Is a down payment required for availing of a used car loan?
It is not mandatory to pay a certain amount as a down payment while applying for the loan. However, certain creditors might ask you to pay a minimum percentage of the amount of the car as a down payment when you are availing a used car loan.
If your credit is low are you eligible for the used car loan?
If you are meeting other eligibility criteria like age limit but your credit score is low your application might get rejected. Certain banks and NBFCS can still offer you a loan but in that case, the interest rates will be very high.
Are there any charges involved in the case of foreclosure?
A penalty fee can be charged by the creditor in case of the foreclosure of the loan.
Can you apply for a used car loan along with a co-applicant?
Yes, car loans can be availed with other co-applicants.
There are a few other things that need to be kept in mind while financing a used car like checking the condition of the used car and all the available documents of the same. Transfer of registration certificate and transfer of insurance policy is equally important. Search meticulously for any driving details or criminal records or accidents before applying for loans for a used car.
