Used Car Loans: 7 Essential Things You Must Know
Buying a car is a significant decision for any individual. However, with rising prices, this dream seems far-fetched for many. The average selling price for passenger cars went up by 50% in the last 5 years. In this situation, investing in a used car is a smart financial move. Opting for a used car allows you to access a car at much lower rates while enjoying many benefits.
However, used car prices are still in lakhs, and affording that is a tough challenge for the middle class. Therefore, financing options such as a used car loan are a great alternative. In this blog, we will explore the seven things you must know before applying for the same.
Applying for a Used Car Loan: 7 Things to Know
Before you apply for a used car loan, you need to ensure you understand certain factors influencing the loan and your decisions. Let us discuss them below:
1. Interest Rates
Be mindful to check used car loan interest rates before applying for a loan. It is a key factor influencing your EMI. Different lenders offer different interest rates. Kogta Financial offers 14% interest rates on pre-owned car loans.
Pro tip: Check your credit score before applying; a better credit score results in lower interest rates.
2. Loan to Value (LTV)
Loan to Value is a ratio measuring your loan amount against the purchasing price of the car. The greater this value, the more cost-effective it is to get a used car loan. If your loan amount is higher, ensure your lender offers a higher LTV.
3. Tenure
Check the tenure of your second-hand car loan before applying. Generally, banks and non-banking financial institutions offer a minimum of 12 months tenure. The tenure can range from 1 year to 5 years. Some lenders can also extend loan repayment tenure upon special requests. Based on your financial conditions, pick a tenure that suits your needs.
4. Eligibility Criteria
Check the eligibility criteria for applying for the loan. If you do not meet the eligibility criteria, your application may get rejected. Therefore it is wise to research the eligibility criteria. With Kogta Financial, the eligibility criteria are simple:
- Clear bank statement
- Own a house/property
5. Documents Required
Start preparing these documents before you apply for the loan. You will need four types of documents: photo identity proof, income proof, address proof and business proof.
To prove your identity, you will need any two of the following:
- Aadhaar Card
- Voter ID Card
- PAN Card
- Passport
- Driving License
To prove your address, prepare these documents (any two):
- Electricity bill
- Telephone bill
- Passport
- Bank account statement
- Driving license
- Ration card
- Property purchase agreement
For income proof, you need to show a bank statement. If you own a business, you need to provide business proof as well. Prepare the following documents:
- Certificate of Practice (COP)
- VAT Registration
- Sales Tax
- Shop Act License
6. Downpayment
To finance a used car auto loan, you have to consider the down payment amount. Opt for a lender who offers low to no-cost EMI. This will help you save a fortune in down payments and your finances can focus on repaying the loan within the fixed tenure.
7. Budget Establishment
After you have researched the basic requirements, take a moment to analyse your budget. Have a set choice on which pre-owned car you want to buy and how you will finance that. A clear roadmap of your car purchasing journey will help you gear up for the same.
How to Apply for a Used Car Loan?
Now that you know the essential things to consider before applying for a used car loan, let us see how you can apply for one:
Step 1: Scroll and click on the ‘Apply Now’ button.
Step 2: Enter the information asked. This will include name, email address, mobile number, city and product.
Step 3: Select Car Loan under the ‘Product’ section.
Step 4: Authorise a representative from Kogta Financial to reach out to you.
Step 5: Enter Captcha and click on ‘Submit’.
It is that easy. Now all you need to do is wait for a representative to call you and then you can discuss in detail your used car purchase.
Why Take a Used Car Loan From Kogta Financial?
There was a time when you had to pay a lump sum in cash when buying a pre-owned vehicle. However, times have changed and the market shifted towards preferring used cars over brand-new ones. Now, other financial institutions offer car loans for used cars.
Kogta Financial is one of the most trusted lenders for used car loans in the Indian market. We offer several benefits and special offers to our customers applying for used car loans. Let us explore them below:
- Flexible Repayment Tenure: Our flexible tenure term goes up to 60 months or 5 years.
- Substantial Loan Amount: Our loan amount starts from Rs.1 lakh onwards, allowing you to cover all the expenses.
- Insurance Availability: Car insurance is mandatory according to the law. We offer motor and life insurance coverage as well.
- Zero Income Proof Needed: We offer loans to no-income-proof customers as well, ensuring ease of finance availability.
Conclusion
Whatever situation you are in, buying a car is a remarkable life decision, right after purchasing a house. The seven essential things to consider before applying for a used car loan are interest rates, loan to value, tenure, eligibility, documents, down payment and establishing a budget. Whether it is your first time buying a car or you want to add a second pair of wheels to your home, Kogta Financial is there to help. With Kogta Financial, ensure transparent and hassle-free processing.
