Buying Used Cars: Things To Know About Used Car Loans

With the coming of the pandemic, people prefer to buy used cars than avail public transport. There are many advantages of buying a used car. The value for money is much higher, you get a better deal for the amount you paid. With the rising rate of inflation and increasing cost of ownership of a new car, it is not something that everyone can afford. In such a situation buying a used car makes a lot of sense. Which is why here's everything you need to know about taking a loan for buying used cars.

Also Read: Top 3 Highest Selling EVs In The Used Car Market

1. Certain banks and non-banking financial companies (NBFC) do not offer a loan if the used car that you are planning to buy is more than three years old.

2. Most banks and NBFCs offer up to 100 per cent finance.

3. The cost of insurance on the purchase of a used car will most likely not be covered in the loan amount.

4. In some cases, interest rates are higher for a used car loan than a new car loan.

5. Be very clear when it comes to choosing an EMI amount and the repayment terms of the used car loan.

6. Documentation is very important when it comes to loans and the same goes for used car loans as well. Along with regular documents like loan form, identity proof and address proof, one also needs a proper car valuation report, for the loan to be sanctioned.

7. Whether you are a salaried individual or have your own business, you will need to submit income proof as well.

8. In case of low credit score, the loan application may be rejected, or the interest rates will be significantly higher.

9. One can also avail of a used car loan with a co-applicant.

10. Certain lenders do charge a penalty in case of a foreclosure.