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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    Pune Used Car Loan

    Pune is one of the largest city in Maharashtra, second only to Mumbai. It has a large number of educational institutions, making it one of the major educational hubs of the country. For this reason, it attracts many students from within the country and from abroad every year. The city is also a very popular tourist destination because of its rich history, abundance of spectacular monuments, and pleasant sceneries.

    Owning a car in Pune

    Since Pune is a large city in terms of area, it has a very good network of public transport such as local trains and buses. Although there is no shortage of public transport within the city, it can be a bit of a hassle to board one during rush hours. In such situations, it does help to have your very own car. You can commute to work or can travel to nearby destinations with ease and on your own terms. Holding the steering wheel of your very own car also has a special feel to it, which can give you a sense of accomplishment.

    Why should you opt for a used car?

    Used cars have a number of benefits and here are some of them:

    • They are easier on your pockets: When you are planning to buy a car, you not only have to consider the brand and the model of the car but also its cost. If you do not have sufficient funds to purchase a brand new car of a specific model, you can always opt for a used one. It can be even cheaper for you if you opt for an older make of the car. You also have the option of choosing a higher-end used car of the higher end instead of a lower-end new car with the amount of money you have.
    • You are less worried about damaging your car: When you buy a brand new car, the tension of scratching or denting it will always be on your mind, which will make you think twice about driving on rough or narrow roads. But with a used car, you are less worried about the damage. This can be a very good thing for you if you are new to driving.
    • The depreciation value of the car is low: As soon as you purchase a brand new car and take it out for a drive, its value decreases drastically as it falls under the “used” category now, and this value keeps on depreciating rapidly during the first 3 years of its purchase. After this period of 3 years, the value of a car depreciates at a much slower rate. This means that if you buy a car that is 3 years old or older, you will be losing less money when you decide to sell it off after a while.
    • Certified dealers ensure your car is in good condition: These days, you no longer have to worry about being conned by a cunning car salesman set to sell you a faulty car. Due to the popularity of used cars, many certified used car dealers have come up who check the cars and ensure they are well maintained before putting them up for sale.
    • Used cars can be under warranty: Newly launched cars now come with a longer warranty period than they used to. This means that you can save quite a bit of money on the warranty charges when you purchase a car. Also, when a car is within a warranty period, you can claim warranty for its damages.
    • You pay few taxes: When you buy a new car, you have to pay handling charges, RTO charge, and insurance charge, which can increase the final amount you need to pay to quite an extent. But with a used car, there are usually no extra charges so you end up paying what is mentioned, making it easier to calculate your finances.

    Used car loan

    The funds you have at your disposal may not always be enough to buy the car you desire. Luckily there are financial lending institutions like banks and non-banking financial companies (NBFCs) that offer loans for new cars as well as used ones. These institutions offer loans of up to 90% of the total cost of the pre-owned car. Some lenders may offer even more depending on their terms and conditions.

    As long as you are a salaried or a self-employed individual who meets the eligibility criteria set by the bank, you can get your used car loan approved. You can repay the principal loan amount along with the interest in the form of equated monthly instalments (EMIs) over a specified tenure.

    Here are some financial institutions that offer used car loans in India:

    Lender Loan Amount Interest Rate Processing Fee Tenure
    HDFC Bank Up to 90% of the purchase price of the used car 11.50% to 17.50% p.a. Rs.5,000 or 2% of the used car loan amount (whichever is lower) 1-7 years (the age of the car should not be more than 10 years by the end of the loan tenure)
    Sundaram Finance Up to 85% of the purchase price of the used car 12% to 14% p.a. Rs.2,500 (a one-time processing fee) 1-3 years (the age of the car should not be more than 8-10 years at the end of the loan tenure)
    TVS Credit Services Up to 85% of the purchase price of the used car 13.1% to 15% p.a. Rs.9,99 + GST 1-5 years
    Kotak Mahindra Prime Up to 90% of the purchase price of the used car 15% to 20% p.a. Rs.3,300-4,750 with applicable service tax 1-5 years
    ICICI Bank Up to 80% of the purchase price of the used car 10% to 17.65% p.a. Rs.6,000 or 2% of the used car loan amount (whichever is lower) 1-3 years

    Eligibility criteria for a used car loan

    The eligibility criteria for used car loans are the following:

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

    The eligibility criteria of different lenders may slightly vary from one another. Checking the websites or talking to their customer care executives of each lender will give you a clearer idea of whether you are eligible for a used car loan or not.

    The chances of your loan getting approved or rejected depends on your eligibility. Before you send in your loan application, you need to make sure that you are eligible for a used car loan because a loan rejection can negatively impact your credit score. A bad credit score will make it harder to avail a loan from future loan prospects.

    Documents required for a used car loan

    In order to avail a used car loan, you need to submit your proof of identity, age, income, and address. Here are a few documents you can submit to the bank:

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

    How to apply for a used car loan online?

    In order to apply for a used car loan online, you first need to visit the websites of different banks and non-banking financial companies. Check each feature of the loan, such as interest rate, processing fee, prepayment and preclosure fee, and tenure. Compare the offers from each bank and choose one that best suits your requirements and is financially beneficial to you.

    Once you have made a choice, download their application form, fill it, and submit it along with the mentioned documents. After you have successfully submitted your loan application, an agent of the bank or NBFC will get in touch with you to take the loan application further.

    How to calculate your used car loan EMI

    Calculating your loan EMI manually is a tedious process and is prone to errors. Luckily, there are many online tools available that help you calculate your EMI with ease. All you need to do is input the car loan amount, tenure, processing fee, and interest rate into the tool. You can then click on the ‘Calculate’ button to get accurate results instantly. You can input different combinations of these values, according to what different banks have to offer, to make comparisons and to see which offer suits you best. Some tools not only show you the EMI amount but your repayment schedule in the form of an amortisation table.

    Things to remember when applying for a used car loan

    Being extra careful when dealing with things that involve money will save you from getting into a sticky financial situation later on in life. Although owning a car is an exciting feeling, you should never rush yourself when applying for a car loan. Take your time and make sure you have all the necessary information before you commit yourself to repaying a huge loan amount over a specific period of time. Here are a few things to consider before availing a used car loan:

    • Interest rates: The sum of money you need to pay as interest on a particular loan depends on the interest rate, which varies from lender to lender. Opting for a loan with a lower interest rate will result in a lower EMI and the total amount of money you pay toward clearing off the loan.
    • Loan tenure: The tenure of a loan is a very important factor you need to consider when availing one. Choosing a longer tenure will reduce the amount of the EMI but will result in a higher amount of interest.
    • Processing fee: When banks process your used car loan, they usually do it for a small fee, which is about 2% of the entire loan amount. When the loan amount gets disbursed to your account, this amount will be deducted from the principal loan amount. If you are an existing customer with a good track record, you can talk to your bank to get this fee waived off, but the final decision will depend entirely on the bank.
    • Down payment: Banks and NBFCs usually finance up to 90% of the cost of a used car, which means you will need to pay the remaining by yourself as down payment. If you opt to pay a higher sum as down payment, you can apply for a lesser loan amount, which will result in lower EMI.
    • Prepayment and preclosure fee: After you have successfully paid 6-12 EMIs you will get an option to make part payments or a full prepayment to clear off your loan before the set tenure. Though this will save you some money in the long run, you may be required to pay a fee for it. The amount charged as fee varies from lender to lender.
    • Foreclosure: Usually in case of car loans, whether new car loans or used car loans, the car that is bought with the loan amount acts as a collateral. If you are unable to pay the EMIs, the bank will repossess your car and sell it off at an auction to recover the remaining loan amount. This process, known as foreclosure, negatively impacts your credit score and lowers your chances of getting loans approved in future.

    When availing a used car loan, it is advisable that you know what you are getting yourself into. Read the terms and conditions of the loan carefully and plan your budget well. If you feel you will be able to handle the financial burden, only then, go ahead with the loan application.

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