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    Kolkata Used Car Loan

    Kolkata, the city of joy, is a vibrant city in the state of West Bengal. It is one of the oldest and biggest cities in India with a charm of its own. Its public transport system is pretty well developed. You can use buses, the underground metro, and trams to get from one point to another. Since the weather of Kolkata is very hot and humid during the summers and since the public transport systems are too crowded during rush hours, it is much more convenient to have your own car. You can drive around the city in comfort and on your own terms and can use it for weekend getaways too. With your own car, you will not have to worry about damage excessively as you would with rental cars.

    Benefits of owning a used car

    Here are some of the reasons why used cars make a good choice:

    • Certified dealers sell well-maintained cars: People are usually apprehensive about buying used cars because they are worried about the condition of the car. This is a valid concern, but you don’t have to worry about it these days. Due to the increase in popularity of used cars, many certified dealers have been started that assess the condition of used cars and make certain that they are of good quality before selling them to you. You need to do your research and visit a trusted dealer when buying a used car.
    • Used cars are cheaper: Brand new cars cost a lot more than used cars due to which opting for a used car makes more sense if you do not have an excess of funds to spend at will. With the amount of money you have, you can buy a used car model of a higher end instead of a new car model of a lower end. If you have set your heart on a specific model but do not have enough money for it, you can always choose the same model of an older make, which will be cheaper.
    • You don’t have to pay extra charges: New cars are priced at a certain value when they are in the car showroom, but when you finally buy it, you end up paying more than what is mentioned. This is because new cars come with added expenses, such as handling charge, insurance charge, warranty fee, and other various charges. On the other hand, used cars do not come with such charges, so you usually pay what is mentioned, especially if the car is still under warranty and is insured.
    • The depreciation rate of used cars is slow: The value of new cars decreases rapidly during the first 3 years of its purchase. When you decide to sell the car, you will end up losing a large percentage of the money you had bought the car with. But in the case of used cars, the value of the car will already be depreciated and the depreciation rate of cars slows down drastically after the first 3 years. So if you buy a car that is older than 3 years, you will not lose a lot of money when you sell it off after using it for a while.
    • You can enjoy tension-free drives: If you are learning to drive or are not too confident about your driving skills, you will be excessively tensed while driving a new car. When driving a used car, you will not be as worried about damaging it, so you will be able to drive much more freely.

    How to get funds to buy the car of your dreams

    Buying a car may not be feasible for you because you do not have sufficient funds to do so. In such cases, you can approach banks and non-banking financial companies (NBFCs) to borrow money. These financial institutions give out new and used car loans for a specific period of time and charge a small interest on it. All you need to do is submit a loan application and as long as you meet their eligibility criteria, the loan will be sanctioned.

    Are you eligible for a used car loan?

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

    The application should have a credit score of 750 and over.

    • He/she should have a minimum annual income of Rs.2-4 lakh.
    • 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.
    • He/she must be 21-65 years of age.

    Always check your loan eligibility before availing a used car loan as a loan rejection can negatively impact your credit score.

    Documents required for a used car loan

    Here are the documents required for a used car loan:

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

    How can you apply for a loan in Kolkata?

    You can apply for a used car loan either online or offline. When availing a used car loan online, you need to visit the websites of different banks, check the offers they have on used car loans, compare them with each other, and chose the one that best suits your requirements and is financially beneficial to you.Once you have made your decision, download the application form, fill it, and submit it along with the documents mentioned. A representative of the bank will get in touch with you and take the loan application forward.

    Applying for a used car loan can be a little tougher than applying for one online because you cannot do it from the comfort of your home. You need to visit the branches of different banks or different NBFCs in person, check their loan offers, and choose the best one for you. Once you make your decision, you need to fill in their application form and submit it with a copy of the necessary documents. An agent of the bank will then take your application forward after contacting you. Do not submit multiple applications at a time as it will decrease your chances of getting your loan approved.

    What should you know about used car loans before availing one?

    Availing a used car loan may be the easiest way for you to purchase a car of your dreams but you need to know about all its features before you do so. When you have all the information about used car loans, you know what you are getting yourself into, and you will know how financially burdened you will be after you take the loan. Here are some things you should know about used car loans:

    • Principal loan amount: Most lenders do not finance 100% of the cost of the car, they usually finance between 80-90% of the value of the car. This means that you need to pay the remaining amount as a down payment. The higher the down payment amount is, the lower your loan burden will be.
    • Loan tenure: When banks loan you a certain amount of money, they expect you to pay it off within a certain period of time, which is known as loan tenure. Loan tenures are generally between 1 year to 7 years. Some banks may have a criterion that the age of the car you are going to purchase should not be more than 8-10 years by the end of the loan tenure. You should talk to your bank and be clear about this criterion before you avail a used car loan.
    • Interest rate: Lenders do not loan you money for free, they charge a certain rate of interest on it. The rate of interest on used car loans varies from one lender to another. It is usually higher than that of a new car loan because the maintenance charge for used cars is higher than it is for new cars. Choosing a used car loan that offers a lower interest rate will reduce your financial burden in the long term.
    • EMI: Once you avail a loan, you need to repay the money in the form of equated monthly instalments (EMIs). The amount you need to pay as EMI depends on the principal loan amount, the interest rate, and the loan tenure. The higher the interest rate and the loan amount, the higher your EMI will be. The higher the loan amount, the lower the EMI amount will be.
    • Processing fee: In order to process your loan amount, banks charge a small fee. This fee is usually 2% of your principal amount but may vary slightly from lender to lender. After your loan application is approved, the loan amount that is disbursed to your account will have this amount deducted from it.
    • Prepayment charges: After you have successfully paid a 6-12 EMIs, you will be allowed to make part payments or a full prepayment in order to repay your loan quicker. This can help lessen your loan burden by reducing the amount you would pay as interest on the loan, but it comes with a charge. Make sure how much your bank charges before making a prepayment so that your decision is financially feasible.
    • Foreclosure: In case of car loans, the car you buy with the loan amount acts as a collateral. If you default the loan, the bank will repossess the car and sell it off at an auction to retrieve the remaining money you owe the bank. This process of repossession is known as foreclosure, which greatly impacts your credit score negatively and decreases your chances of getting loan applications approved in future.

    Calculate your EMI

    Calculating your EMI manually is a tiring process and is prone to errors. Fortunately, there are many online tools available, which will do the calculation for you. All you need to do is, input the loan amount, processing fee, interest rate, and loan tenure. Once you click “Calculate” you will get the car loan EMI amount and the entire repayment schedule in the form of an amortization schedule. You can try different combinations, depending on the used car loan offers from different banks, and see which offer is most suitable for you.

    Compare used car loans

    Here are some of the best used car loans offered in India:

    Lender Loan Amount Interest Rate Loan Tenure
    Axis Bank Minimum - Rs.1 lakh Maximum - Up to 90% of the value of the used car 15% p.a. (minimum) 1-5 years
    Kotak Mahindra Prime Minimum - Rs.1.5 lakh Maximum - Up to 90% of the total value of the vehicle 15% p.a. to 20% p.a. 1-5 years
    Magma Fincorp Up to 90% of the value of the used car 16% p.a. to 20% p.a. 1-15 years
    TVS Credit Services Minimum - Rs.20,000 Maximum - Up to 85% of the total value of the used car 13.1% p.a. to 15% p.a. floating 1-5 years
    HDFC Bank Minimum - Rs.75,000 Maximum - Up to 90% of the total value of the used car 12% p.a. to 15.5% p.a. Up to 7 years (The age of the car should not be more than 10 years at the time of car maturity)
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