If you really think about it, it's easier getting a loan for a car than a loan for bus fare!
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    Coimbatore Used Car Loan

    Coimbatore is one of the major cities in the state of Tamil Nadu. Life in the city is pleasant and so is its climate because of the presence of greenery in and around it. It is a major healthcare, education, and manufacturing hub due to which it is growing at an incredibly fast rate. The presence of medium- and large-scale industries has attracted many job-seekers to the city over the past few years, making it one of the most popular cities in the Southern part of India.

    Owning a car in Coimbatore

    Owning a car in Coimbatore can be extremely helpful as you don’t have to worry about being stuck in traffic for hours like in other major cities of the country. Though you can take public transport, like trains and buses, to commute to work, having your own car can make things much easier for you. There are many beautiful spots around the city you can drive to over the weekend to relax and unwind before you head back to work. When you drive your own car, you will not have to worry too much about the cost of damages, unlike driving rental cars.

    Why should you buy a used car instead of a brand new one?

    Though the thought of owning a brand new car seems exhilarating, it is not always the best option for most people. The cost and maintenance charges of these cars are usually high, which may financially strain your pockets. Unless you are a very skilled driver with less concern for how much you spend, a used car is often a better choice for you. Here are some of the reasons why you should opt for a used car instead of a brand new one:

    • The price is lower: Since India is a place where people focus on saving money instead of splurging aimlessly, buying used cars is often a good option because of the cost. With the amount of funds you have kept aside for a car, you can buy a better model if you opt for a used car instead of a brand new one. If you have set your heart on a specific car model, you can get it at an even cheaper price if you choose an older make.
    • You can buy well-maintained cars from certified dealers: Used cars are becoming increasingly popular these days due to which many certified used car dealers have come up. These dealers check the cars and ensure they are well maintained before they sell them. As long as you do your research and buy your car from such certified dealers, you will not have to worry about purchasing a faulty car.
    • You will be less worried about damaging it: Driving a brand new car is usually a tense experience, especially if you are new to driving. The thought of saving it from any form of damage is always on your mind. But with a used car, you are not as worried. You can drive it around more peacefully than you would drive a new one.
    • You will not have to pay extra charges: When new cars come out in the market, they will have a certain price tag, but by the time you purchase it and take it home, you will end up paying a lot more than what is mentioned. This is because new cars come with a lot of extra charges such as handling fee, RTO charge, insurance fee, warranty fee, and miscellaneous other charges. But in the case of used cars, you usually pay what is mentioned, especially if the car is already under warranty and is insured.
    • You lose less money when you sell it: Hardly anyone ever buys a car with the intention of keeping it forever. After a few years of purchasing a car, you will most likely sell it off to purchase another one. In such situations, buying a used car is a better option than buying a new one because of its depreciation rate. The value of a brand new car depreciates rapidly during the first 3 years of its purchase and then slows down drastically. So if you plan to sell it, you will be losing a huge sum of money. If you buy a used car, its value will already have undergone major depreciation. So if you plan to sell it, you will lose less money comparatively.

    Auto finance for the car of your dreams

    Once you have set your mind on purchasing a car, whether new or used, the first thing you have to think of is the cost. If you do not have enough funds to purchase a used car, you have the option of approaching a bank or a non-banking financial company (NBFC) for financial help. These financial institutions offer used car loans of up to 90% of the total cost of the car at competitive rates. As long as you fit their eligibility criteria, you can get a used car loan approved.

    Used car loan eligibility

    Here are some of the eligibility criteria for a used car loan:

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

    These eligibility criteria may vary slightly from lender to lender. Visiting their website or talking to one of their agents will give you a better idea of their eligibility criteria so that you can apply accordingly.

    You should always check your used car loan eligibility criteria before availing a loan because a loan rejection lowers your credit score, which makes it harder to avail loans in future.

    Documents for a used car loan

    The documentation process for a used car loan is relatively simple. You will need to submit your identity proof, age proof, income proof, and residence proof.

    Here are some of the documents you can submit:

    • Aadhar card, PAN card, passport, or voter ID as identity proof.
    • 3 months’ salary slips, 3-6 months’ bank statements, or IT returns as income proof.
    • Passport or utility bills as proof of residence.
    • Driving license, 10th and 12th certificate, or passport as age proof.

    Features of a used car loan

    • Processing fee: Banks charge a certain amount of money in order to get your loan processed. This fee is usually about 2% of the entire loan amount. It is deducted from the principal loan amount when the money is disbursed to your account. If you are an existing customer with a good credit history, you can talk to the bank to get it waived off, they may consider doing so but it is completely their call.
    • Loan tenure: The set amount of time within which you have to pay back the loan amount to the lender is known as the loan tenure, which also varies from lender to lender. The loan tenure offered by banks is usually between 1-7 years and depends on the age of the car too. Some banks have a criterion that the age of the car should not be more than 8-10 years at the end of the loan tenure.
    • Interest rate: The interest rate on used car loans depends from one lender to another. It is usually based on the age and make of the car being purchased. The rate of interest rate of a used car loan is generally higher than a new car loan because of the higher maintenance cost, insurance cost, and lesser availability of spare parts of older cars.
    • Foreclosure: In case you are unable to make the EMI payments due to certain reasons, the bank will first send you notices asking you to pay them off. If you are still unable to make the payments after you receive the notices, the bank authorities will repossess the car you have bought with the loan amount and sell it off at an auction to recover the remaining payment. A foreclosure affects your credit score negatively and will make it very difficult for you to get a loan approved in future.
    • Prepayment or preclosure fee: After you have paid 6-12 EMIs, you will get an option of making part payments or making a pull prepayment and clearing off the loan. Although this is financially beneficial in the long run, it can have a fee. Do consult with your lender about its prepayment or preclosure charges as it varies from lender to lender.

    How to apply for a used car loan in Coimbatore?

    You can apply for a used car loan in Coimbatore either online or offline.

    • Online: Applying for a used car loan online is pretty simple. All you need to do is visit the websites of different banks and NBFCs and check each of the features of their used car loans. Make a note of how much each of them is willing to finance, the interest rate, the loan tenure, the processing fee, and the prepayment charges. Compare the offers of one lender with those of the others, and choose one that best suits your requirements and is cheaper for you. After you have made up your mind, download the used car loan application form from the lender’s website, fill it, and submit it along with the necessary documents. An agent of the bank will get it touch with you and take the application forward. Make sure not to submit multiple applications as it will increase the odds of your loan application getting rejected, which negatively impacts your credit score.
    • Offline: Applying for a used car loan offline is slightly more tedious than applying for one online because you have to physically go to a bank and check their offers. The good thing about doing so is that you can ask an agent of the bank to explain the used car loan’s features, especially if you are having a hard time understanding them. Do visit the branches of a few banks and a few NBFCs and compare their offers before deciding on one lender. You can then fill their application form and submit it along with a copy of your documents. A representative of the bank will take the application forward.

    Compare used car loans online

    Lender Loan Amount Interest Rate Loan Tenure Processing Fee
    HDFC Bank Up to 85% of the value of the used car 11.50% to 17.50% p.a. 1-7 years (the age of the car should not exceed 10 years by the end of the loan tenure) Rs.5,000 or 2% of the used car loan amount, whichever is lower
    ICICI Bank Up to 80% of the value of the car 10% to 17.65% p.a. 2-3 years Rs.6,000 or 2% of the used car loan amount, whichever is lower
    TVS Credit Services Up to 85% of the value of the used car 13.1% to 15% p.a. 1-5 years Rs.999 + GST
    State Bank of India Up to 2.5 times your net annual income 12.60% p.a. 1-5 years 0.5% of the used car loan amount + GST (minimum Rs.450 + GST, maximum Rs.9,100 +GST)
    Sundaram Finance Up to 85% of the value of the used car 12% to 14% p.a. 1-3 years Rs.2,500 (a one-time processing fee)

    How to calculate your used car loan EMI?

    The EMI you need to pay in order to repay your used car loan amount depends on the amount you take as a loan, the interest rate, and the tenure of the loan. Calculating your EMI can be a tedious process which is prone to errors. You can instead use online car loan EMI calculators that are not only quick but also accurate. All you need to do is enter the loan amount, the interest rate, the tenure, and the processing fee into the tool and click “Calculate.” Your EMI amount will be displayed instantly. Some tools display a pie chart or bar graphs that show the total loan amount along with the interest charged on the loan. Some tools also display your entire repayment schedule in the form of an amortisation table.

    You can enter different values depending on the offers by different lenders to see which offer best suits your requirements and which one is less financially burdening. You can use this information to choose which loan offer you want to take up.

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