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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    Hyderabad Used Car Loan

    Hyderabad, the capital city of the state of Telangana, is one of the IT hubs of southern India, making it a popular destination for job seekers. It is also a popular tourist destination because the “old city” has many ancient attractions that draw in thousands of tourists every year. It is a city that is undergoing rapid growth due to which the connectivity within the city is well established. Though you can always take the bus or the train, which is packed during rush hours, to travel within the city, having your own car makes it much easier to move around.

    Why do used cars make a good option?

    The choice between a used car and a new one is often a tough one, but for many people owning a used car makes more sense than owning a brand new one. There are many reasons why a sued car can be a better option for you and here are some of them.

    • The depreciation rate of a used car is lower: The value of a new car depreciates rapidly during the first 3 years of its purchase. So if you plan to sell it off, you will end up losing quite a bit of money. But in the case of a used car, the value will already have undergone major depreciation, especially if you choose one that is older than 3 years. So if you sell it after driving it for a while, you will lose lesser money comparatively.
    • Used cars are cheaper: The price of a commodity is the first thing we tend to look at when making a purchase. If you compare the price of a new car with the price of a used one, buying a used car is much easier on your pockets. If you have limited funds to buy a car, you can get a used car of a better model than a new car model with the amount of money you have. In case you have set your heart on a particular model but don’t have enough money to purchase it, you can always choose an older make of the car, which is usually cheaper.
    • You don’t have to worry about a used car being faulty: When you purchase a used car, it is normal to be worried about the condition of the car as no one wants to be sold a faulty car. But these days, due to the popularity of used cars, many certified dealers have come up who check the cars and ensure they are well maintained before putting them up for sale. If you do your research and buy cars from trusted dealers, you will not have to worry about the car being faulty.
    • You don’t have to worry too much about damaging the car: When you drive a new car, the tension of getting the first scratch or dent on it will be predominant on your mind. But this tension is much lesser when it comes to driving a used car. So if you are not a confident driver or are just learning to drive, you should opt for used cars to enjoy tension-free drives.
    • You don’t have to pay extra expenses when buying a used car: When a new car comes out on the market, it will be priced at a certain value. When you finally purchase the car, you will notice that you end up paying a lot more than what is mentioned. This is because a new car will have other expenses, like handling charge, insurance fee, warranty charge, and other miscellaneous charges associated with it. On the other hand, when you purchase a used car, you don’t have to pay all these extra charges, especially if the car is already insured and is covered under warranty.

    Used car loan for the car of your dreams

    If you do not have adequate funds to purchase the car of your choice, you have the option of approaching banks and non-banking financial companies (NBFCs), who loan you money for a specified period of time and charge a small interest on it. As long as you meet their eligibility criteria, your used car loan application will be approved.

    Check your eligibility for a used car loan

    Different lenders have different eligibility criteria for used car loans. Here are some of the basic ones:

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

    Do check your eligibility criteria before applying for a used car loan as a loan rejection will adversely impact your credit score, making it difficult for you to avail loans in future.

    Documents required for a used car loan

    The documents required to avail a used car loan are the following:

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

    How to apply for a used car loan online

    Applying for a used car loan is very simple and convenient. All you need to do is visit different lenders’ websites and check what offers they have on used car loans. Compare each of the aspects of the loan, such as loan amount, interest rate, tenure, processing fee, and prepayment charges. Once you have gone through all of your options and have made a decision, download the application form, fill it, and submit it along with the necessary documents. Make sure not to submit multiple applications at one time as it can increase the chances of your loan application getting rejected.

    Things to keep in mind about used car loans

    You may be in a rush to get behind the steering wheel of your very own car and may apply for a used car loan without taking into account all its features and charges, but you have to take it slow. No matter how excited you are about purchasing a car, ignoring the charges may cause you to be in a financially sticky situation later on. Here are a few aspects of used car loans you need to keep in mind before applying for one:

    • Tenure: When you avail a loan from a lender, you are expected to pay it back within a certain period of time, which is known as the loan tenure. The tenure can range from 1-7 years and varies from one lender to another. Some banks or non-banking financial company may have a criterion that the age of the car should not be more than 8-10 years at the end of the loan tenure. Do consult your lender about this before availing a used car loan.
    • Interest rate: When you avail a loan, banks and other financial institutions will charge you an interest for lending you the money. The interest rate will differ from lender to lender and will depend on the model and age of the car being bought. Used cars loans usually come with a higher interest rate than new car loans because of the maintenance and insurance charges are usually higher for used cars. Before you apply for a loan, make sure you know how much interest you are being charged for it to avoid any misconceptions later on.
    • Down payment: Most lenders usually finance 80-90% of the cost of a used car. You will have to pay the rest of the amount as a down payment. The higher the down payment amount, the lower will be the loan amount and the EMI.
    • EMI: You are expected to repay the loan amount in the form of equated monthly instalments (EMIs). The amount you need to pay as EMI will depend on the loan amount, interest rate, and tenure of the loan. The principal loan amount and interest rate are directly proportional to the EMI, whereas the tenure is inversely proportional. You need to calculate the EMI before you avail the used car loan so that you are not financially burdened.
    • Processing fee: Bank charge a small fee for processing your used car loan. This fee is usually 2% of the principal loan amount. Once your loan gets approved the processing fee will be deducted from the principal loan amount that will be disbursed to your account.
    • Foreclosure: When you take a used car loan, the car acts as the collateral. If you are unable to pay the EMI, the bank will repossess the car and will sell it off at an auction in order to retrieve the remaining loan amount. This process of repossession is known as foreclosure, which negatively impacts your credit report and makes it extremely difficult for you to avail a loan in future.
    • Prepayment and preclosure fee: After you have successfully paid 6-12 EMIs, you will be allowed to make part payments or make a full prepayment to clear off the loan. Doing so is financially beneficial to you as it will reduce the amount you pay as interest, but it will have a charge, which varies from bank to bank.

    Compare used car loans

    Here are some of the financial institutions offering used car loans in India:

    Lender Loan Amount Interest rate Loan Tenure
    TVS Credit Services Up to 85% of the purchase value of the used car 13.1% to 15% p.a. 1-5 years
    Capital First Rs.1.5 lakh to Rs.25 lakh 2.5% to 14.5% p.a. 1-7 years
    State Bank of India Up to 2.5 times your net annual income 12.60% p.a. 1-5 years
    ICICI Bank Up to 80% of the purchase value of the used car 10% to 14.65% p.a. 1-3 years
    Sundaram Finance Up to 85% of the purchase value of the used car 12% to 14% p.a. 1
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