Ahmedabad Used Car Loan

Ahmedabad, a city in the state of Gujarat, is one of the largest cities in India. It is one of the fastest developing cities in the country and has a well developed public transport system, like buses and trains. Although you can use these forms of transport to commute within the city, having your own car can make it much more convenient for you. You can even use it for weekend getaways, and you can drive your car without having to worry about the damages like you would with rental cars.

Why should you opt for a used car?

The thought of owning a car can be exciting and can give you a sense of accomplishment, but the dilemma of whether to opt for a used car or a new one may be on your mind. If you are not a confident driver or have a limited budget, a used car may be the right choice for you. Here are some reasons why you should opt for a used car.

• The price is lower: For most people, the cost of cars is what prevents them from buying one. So if your budget is not too high, you can opt for a used car as they are much cheaper than used ones. With the amount of funds you have at your disposal, you can purchase a used car model of a higher end instead of a lower end new car model. If you still do not have sufficient funds, you can save some money by choosing an older make of the model of your choice.
• You can enjoy tension-free drives: When you purchase a brand new car, you will be worried about damaging it when you drive it. This tension can be bad for those who are learning to drive or are not extremely skilled drivers. But with used cars, this tension is not that much, allowing you to drive much more freely.
• The depreciation rate is slower: The price of a brand new car depreciates rapidly during the first 3 years of its purchase. So when you decide to sell your car after a few years of using it, you will lose a large percentage of the money you had spent on the car. But if you buy a used car, its value will already be depreciated, so you don’t have to deal with the stress of losing a lot of money.
• Used cars are well maintained these days: Since used cars are in demand nowadays, many certified dealers have come up, who check the cars and ensure they are well-maintained before putting them up for sale. So if you buy from such dealers, you will not have to worry about being conned by a cunning salesman.
• You will save on taxes: When you purchase a new car, you will have to pay more than the value that is mentioned. This is because you will have to incur additional expenses such as insurance charge, warranty fee, handling charges, and other miscellaneous expenses. On the other hand, you usually end up paying what is mentioned for used cars, especially if the car is already insured or under warranty.

Auto finance for a car of your choice

Once you have made up your mind to purchase a used car but do not have the means to do so, you can borrow money from banks and non-banking financial companies. These lending institutions offer new as well as used car loans at competitive interest rates. You can get up to 80-90% of the value of the car from them. As long as you meet their eligibility criteria your car loan application will be approved.

Here are some banks and NBFCs that provide used car loans in India:

How to apply for a used car loan in Ahmedabad

You can apply for a used car loan in 2 ways, online or offline. When applying for a used car loan online, you need to visit the websites of different lenders and see what they have to offer. Compare the offers, select one that suits your requirements, download the application form, fill it, and submit it along with the necessary documents. Once you submit the application, an agent of the bank will contact you and take your application forward.

Applying for a used car loan offline is a bit more hectic than applying for one online because you have to visit banks and NBFCs in person to check out their loan offers. Once you have decided which lender to borrow funds from, you can fill their application form, and submit it along with a copy of your documents. Remember not to submit multiple applications at a time as it reduces your chances of getting your loan approved.

What is the eligibility for a used car loan?

The eligibility criteria for used car loans vary from one lender to another. Here are some basic eligibility criteria that most financial institutions have:

• The applicant should have a credit score of 750 and above.
• He/she should have a minimum annual income of Rs.2-4 lakh.
• He/she must between the ages of 21 years and 65 years.
• He/she must be a salaried or a self-employed individual.
• He/she must have work experience in the same field for a minimum of 2 years.

You should always check your used car loan eligibility before availing one as a loan rejection can negatively impact your credit score.

What are the documents required for a used car loan?

Here are the documents required to avail a used car loan:

• Identity proof: Aadhar card, voter ID, PAN card, or passport.
• Address proof: Ration card, passport, or utility bill.
• Age proof: PAN card, passport, birth certificate, voter ID, or driving license.
• Income proof: IT returns, 3-6 months’ bank statements,3 months’ salary slips.

Features of a used car loan

Used car loans have the following features:

• Loan amount: Most financial companies finance up to 80-90% of the value of the car you are planning to purchase. You will have to pay the rest of the amount as a down payment. The higher the down payment amount, the lower your loan burden will be.
• Loan tenure: Banks give out used car loans for a specified period of time, known as loan tenure, which is generally between 1 year to 7 years. Some banks may have a criterion that the age of the used car should not be more than 8-10 years by the end of the loan tenure.
• Interest rate: Lenders loan you money and charge an interest on it. The interest rate varies from lender to lender and depends on the age and model of the used car you are purchasing. The interest on used car loans is usually higher than that of new car loans because the maintenance charge for used cars is usually higher.
• Processing fee: Banks charge a small fee for processing your loan. This charge is usually around 2% of the principal loan amount. Once your loan application is approved, the principal loan amount disbursed to your account will have this charge already deducted from it.
• EMI: You have to repay the loan amount in the form of equated monthly instalments (EMIs). The amount you have to pay as EMI depends on the loan amount, interest rate, and loan tenure. The higher the loan amount and interest rate the higher the EMI, and the higher the loan tenure the lower the EMI.
• Foreclosure: In case of car loans, the car acts as a collateral. If you fail to pay the EMIs, the bank will repossess the car you have purchased with the loan amount and sell it off at an auction to recover the remaining amount. In case they are unable to recover the full amount, you will have to pay the rest. Foreclosures impact your credit score negatively and make it difficult for you to avail a loan in future.
• Prepayment fee: After the payment of 6-12 EMIs, you can make partial payments or a full prepayment to clear your used car loan amount. Doing so is financially beneficial as it will lower the amount you have to pay as interest, but there may be a charge associated with it, which varies from one lender to another. Talk to your bank about the charges before making a prepayment.