Owning a car is a dream for many and it can be easily achieved by taking a car loan.
Used Car Loans
It is advisable to take a car loan because purchasing a vehicle in cash is quite difficult. At times even purchasing a new car can be a decision which needs a second thought. This is because of the heavy EMIs that would have to be paid. In such situations, one still has the option of purchasing a used car. These used cars can be purchased by taking a used car loan. This article discusses the step-by-step process of taking a used car loan and the documentation required for the same.
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Eligibility Criteria
Before taking a used car loan, one must check the eligibility criteria of different lenders. This helps you understand which lender’s criteria are suitable for you. These criteria can be either checked from a lender’s website or a used car loan app for quickly checking all the rates. Below are those criteria that are asked by most of the lenders.
- Nationality: Lenders consider the nationality of borrowers before offering the loan.
- Age: Lenders also check the age of the individual which must be within 18 years to 80 years. This is because most individuals start earning by 18 years of age. After 80 years of age, they start facing health issues and might default on repayment.
- CIBIL score: The CIBIL score states the creditworthiness of an individual, this can fall in the range of 750 and above. It's because lenders don’t offer loans to people who have below 750.
- Employment: The borrower must be employed either through a job or can have their own business. This ensures that you have a stable source of income and can repay the loan.
Documentation Required for a Used Car Loan
After checking the eligibility criteria, check for the documentation process as well. This helps you arrange all the necessary documents and speed up the approval process. The essential documents required for the loan are mentioned below.
Identity Proof
The identity proof is required by the lenders to ascertain your identity and confirm you’re a citizen of India.
Employment Proof
Employment proof is required by the lender because they want to be sure of your repayment capability. Having employment gives them an assurance that you have a stable income which can help you easily repay the loan.
Bank Statements
Lenders ask for your bank statements to check your past 3-4 months' transactions. They check this to ensure that you’re capable of making timely payments.
Vehicle Registration Certificate
Lenders ask for a vehicle registration certificate because it verifies the legal ownership and authenticity of the vehicle. The certificate also includes important details such as the car’s model, and year.
Step-by-Step Process for Applying for a Used Car Loan
After checking the eligibility criteria and the documents required for a used car loan one must check the process of these loans. This helps one smoothly take the loan without facing any unnecessary delays.
Select a Vehicle
The first step in taking a used car loan is selecting what kind of vehicle you want. You can decide this based on the purpose you need the vehicle for. This may be commercial usage, personal use, or any other purpose.
Select the Right Lender
Once you’ve decided which vehicle you want, the next step is to select a lender. Various lenders are offering used car loans but choosing the one that suits your needs will smoothen the process. Check their terms and conditions for a better understanding.
Check Loan Benefits
After checking the terms, check what benefit it provides you. There are various benefits that lenders provide such as longer tenures, shorter repayment amounts, or getting a loan of 100% of the amount, etc.
Select Right Terms
There are various terms that lenders mention in the loan agreement and borrowers often sign it without reviewing them. These terms include interest rate, duration, additional fees, pre-payment fees, etc.
Sign Loan Agreement
After checking the terms, the next step is to sign the documents. However, first, double-check the provided details, such as interest rates, loan amount, repayment tenure, etc. If you feel something is not right then reach out to the lender for clarification.
Conclusion
Taking a used car loan is an easy process if one knows about the necessary documentation and the flow of the process. The documentation process of the loan is also quite smooth with minimal documentation required. This includes essential documents like identity proof, employment proof, and bank statements. After this the process includes a few steps like researching lenders, choosing the one that suits your needs, selecting the terms and signing the agreement. This way, anyone can take a loan easily and quickly.
Disclaimer: The information provided on the Website does not constitute investment advice, financial advice, trading advice, or any other form of advice, and you should not interpret any of the financial content as such. Please conduct your own due diligence and consult with a financial advisor before making any investment decisions. Midday does not endorse or promote any such activities, and you access them at your own risk, fully understanding the monetary and legal consequences involved. Midday shall not be held responsible for any losses you may incur as a result of using any such apps or websites.
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