Bengaluru is a happening city in India with multiple job opportunities in various fields, quality educational institutions, abundant society apartments, well-maintained parks, 5-star hotels, and pubs. The capital city of Karnataka has a diverse population with people from all over the country settling down here for high-paying jobs. Given the hustle-bustle of the city, the cost of living is unsurprisingly higher than most cities in the country.
Traveling in the city can be a bit arduous owing to a large population and heavy traffic. Majority of the residents own a four-wheeler or a two-wheeler of some kind to get around the city for work, school or shopping. The remaining opt for public transport like metro trains and buses. There is no doubt that cars are a convenient mode of transportation, except when stuck in a heavy city traffic. However, you can use the same car to leave behind the heavy city traffic and to go on long road trips on the weekend.
If you are in the market for a car but don’t have sufficient funds to buy one, you can opt for a car loan from the bank. As the auto manufacturers around the world are launching new car models every month, the consumers are overwhelmed by the options and the lack of funds. Furthermore, carmakers are hiking prices on certain models of cars this month. This makes it harder to afford a car of your dreams.
There is an alternative to purchasing a brand new car of your choice. The price of used/pre-owned cars is lower than new cars. With the help of used car loans, you can purchase a good-condition used car of the same model (less than 5 years old). What’s more, if you are someone who changes cars every few years, you can save money by purchasing used cars rather than new cars.
Banks and Non-Banking Financial Companies (NBFCs) offer used car loans for the purchase of a pre-owned or used car. Although the price of a used car is lower than a new car, used car loans have a higher interest rate and lower loan tenure compared to new car loans due to the age of the car. Banks offer used car loans up to 80-85% of the ex-showroom/on-road price of the car at 12-18% for a loan tenure of 1 to 5 years. Used car loans are paid in Equated Monthly Installments (EMIs) over a specified period of time called the loan tenure.
Here is a list of the top banks and NBFCs providing used car loans in India:
|Bank||Loan amount||Loan tenure||Rate of Interest||Processing fee||Prepayment charges|
|HDFC Bank||Up to 100% funding (100% value of the used car or 3-6 times your yearly income)||1 to 7 years (age of the car at loan maturity shouldn't cross 10 years, subject to a maximum loan tenure of 5 years)||11.50-17.50 p.a. based on the segment and age of the car||Rs.5,000 or 2% of the car loan amount, whichever is lower||
|State Bank of India||Up to 2.5 times your net annual income||1 to 5 years (also, the age of the car should not be more than 5 years at the time of taking the car loan)||12.60% p.a.||0.50% of the loan amount + GST, subject to minimum Rs.450 + GST and maximum Rs.9,100 + GST||2% of the prepayment amount|
|Sundaram Finance||Up to 85% of the purchase price of the car or Valuation Report by SF Panel surveyor, whichever is lower||1 to 3 years (age of the vehicle by the end of loan tenure should not exceed more than 8-10 years, depending on the make of the car)||12-14% p.a.||Rs.2,500||
|ICICI Bank||Up to 80% of the price of the car||24 to 35 months||10-17.65% p.a.||Rs.6,000 or 2% of the car loan amount, whichever is lower||
|TVS Credit Services||Up to 85% of the price of the car||1 to 5 years||13.1-15% p.a.||Rs.999 + GST||
Compare various used car loan offers across the top lenders on a reliable third-party website and choose one with a low interest rate, suitable loan tenure, and flexible repayment options. To apply for a used car loan online, download the application form from the bank website. Submit the duly-filled and signed application form along with the necessary identity proof, income proof, age proof, and address proof at the nearest bank branch. Or, you can choose to upload the application form and the relevant documents to the bank website.
Before applying for a used car loan, it is wise to check your car loan eligibility so as to avoid loan rejection. Multiple loan rejections can have a negative impact on your credit score. A bad credit score can hurt your future loan prospects. The eligibility criteria for a used car loan is as follows:
Your car acts as collateral for a car loan. However, some banks may ask for a co-applicant signature for used car loans.
Use the free car loan EMI calculator available on the bank website or a reliable third-party website to find out how much your used car loan will cost you monthly. The tool is simple and easy to use. All you have to do is enter the loan amount, loan tenure, interest rate, and processing fee of your car loan into the tool. Click on the ‘Calculate’ button. You will get instant and accurate results. Manual EMI calculation is prone to human errors.
The results of your EMI calculation will be represented in the form of an amortisation table, a pie chart, and a bar graph. You will get a complete breakdown of your used car loan. The amortisation table is a representation of your periodic used car loan schedule. It consists of EMI payments, interest payments, the outstanding due after each payment, etc. One main advantage of an online car loan EMI calculator is that you can input varying combinations of loan amounts, interest rates, and loan tenures to get revised repayment schedules. Depending on the results, you can choose a suitable loan tenure and loan amount in order to save up on the overall interest payments on your used car loan.
Explore the city of Bengaluru in a car of your own. From hatchbacks to luxury sedans, banks offer used car loans for most makes and models of cars on the market. However, the age of the car should not exceed 5 years. This is mainly due to the depreciation rate and motor insurance costs of used cars. Due to the high maintenance cost and the difficulty in obtaining spare parts for a used car, the insurance cost of a used car is higher than a new car.
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