Step by step guide to get the right loan for used car
Many lenders in the market offer personal loans at competitive rates, which can finance a second-hand car. It is an excellent way to purchase a second-hand vehicle, without burdening your finances. But before you settle for a personal loan, you must know everything about finding the right loan.
Personal loans for a second-hand car are mostly an unsecured finance options offered by many lenders. So, you do not need to use any asset as collateral for the loan. The loan amount that you can avail varies across lenders and depends on various factors, including your CIBIL score.
A step-by-step guide to take a used car loan
Step 1: Ensure to check the interest rate charged by various lenders
Before settling for a personal loan, make sure to do your research. It would be best to compare the interest rates charged by several lenders.
Step 2: Find out about the additional charges
Besides the interest rate, find out about the additional charges, such as part-prepayment charges, stamp duty, processing fee payable monthly installments.
Step 3: Do not overindulge
Go for a plan that will not burden you and doesn’t affect your monthly budget.
Following the steps is easy. However, it is equally important to know the document and applicable conditions of the loan.
Things you need to know about a personal loan
Here is a detailed list of all the necessary information to guide you in finding the right personal loan for a used car-
Applicable rates and charges-
Various rates and charges are applied on a personal loan for a second-hand vehicle. While the interest and principal are the essential EMI components, the applicable interest rate, secure fee, EMI bounce charges, processing fees, penal interest, foreclosure charges, maintenance charges, and part-payment fees also add to the total payable amount. The interest rate ranges from 10.50% to 18%. These charges vary from lender to lender, so make sure to clarify all the details from the lender before you apply for a personal loan. You can find these details on the lender’s website and calculate the monthly EMI using used car emi calculator.
Documentation-
Generally, essential documents such as identity proof, address proof, income proof, and bank account salary statement of your account for the past three months are required for availing a personal loan.
Loan Tenure-
The tenure for used car loans varies from lender to lender. The loan tenure ranges from 2 to 5 years or even more. You can choose a tenure that will not be a burden and allow you to repay the loan comfortably. A longer loan tenure might reduce your monthly instalments, but it would increase the interest rate charged on loan, thus increasing the total loan amount. Note that heavy penalties and fees might be charged on failing to repay the full amount within the loan tenure.
Eligibility Criteria-
The eligibility for a personal loan for a used car is easy to meet. You must be a citizen of India under a certain age with a fixed monthly income to avail a personal loan to finance a second-hand car successfully. You can check the eligibility criteria on the lender’s website before applying for a personal loan.
Credit Score-
Make sure to have an excellent CIBIL score before you apply for a personal loan. It must be around 750 or above. A low CIBIL score makes the approval process difficult as it indicates poor credibility. At the same time, a good CIBIL score can be more beneficial in availing a personal loan for used car.
Approval Process –
It can be a little time-consuming. You may be required to visit the lender’s institution multiple times for the application process. However, most people prefer to apply online for personal loans. The online application process is more comfortable, faster, and saves you the hassle of visiting your lender in person. Just visit the lender’s website and fill out the application form for a personal loan. Then, share the required details, choose a suitable loan tenure, the loan amount, and submit the required documents for a hassle-free approval.
Conclusion:
A personal loan has made it easier to buy a used car whenever you wish. There is no need to keep waiting for sufficient funds. All you need to do is avail a personal loan and have them right away. Just make sure to maintain a good CIBIL score and find out the loan tenure to pay conveniently and stress-free. Most importantly, make sure to read your loan document thoroughly before you make your final decision.