Cars are a convenient mode of transportation whether you are commuting to your workplace or dropping off your children at school. The price of a used car is lower than the price of a new car of the same make and model. That is why, purchasing a used car is a good alternative to buying a new car when you are low on funds.
The depreciation value of a car is highest in the first 2 years. Therefore, when you opt for a used car, you don’t have to worry about the depreciation value of the car as much as the previous owner of the car.
Due to the high standards of auto manufacturing that are followed by the automakers of the industry, the cars that are launched these days come with a long warranty period. So, you can go for a used car without trepidation. Still, ensure you purchase a well-maintained used car.
Certification is available from reliable dealerships across the country for used/pre-owned cars as they will inspect the cars thoroughly before putting them up for sale. Also, if you are learning to drive for the first time then a used car is more suited to the purpose than a brand new car.
Chennai is the capital city of Tamil Nadu. The population of the fifth largest city in India exceeds more than 8 million. The city is teeming with people as it is known for its reputable educational institutions and blooming job opportunities across various industries. Although, the traffic in Chennai is as heavy as Mumbai and Bengaluru, having a car to get from place A to place B in the large city can make your life easy.
For those who are interested in long-distance driving on the weekends, there are several temple towns and beach resorts in and around Chennai that one can visit with family and friends. Owning a car in Chennai can be convenient for short-distance and long-distance travels. Unlike a rental car, when driving a car of your own, you tend to worry less about the cost of damages to the car.
Banks, non-banking financial companies, and other lending institutions in the country offer new and used car loans at competitive interest rates. You can get up to 80% of the price of the used car. Any salaried or self-employed individual who meets the car loan eligibility criteria set by the bank can get easy access to credit in the form of a car loan. Bank loans are repaid in Equated Monthly Installments (EMIs) over a specified period of time.
To get the best used car loan offer, it is important to do your research. Nowadays, with the advent of technology, the research has been made easy. All you need is a computer and a good internet connection to do your research. Visit a reliable third-party comparison website to compare the various used car loan offers across the top lenders and choose one with a low interest rate, zero processing fee, a suitable loan tenure, and flexible loan repayment options.
The eligibility criteria for a used car loan varies from lender to lender. Before applying for a car loan, it is advisable to check your car loan eligibility online. The eligibility criteria for a used car loan is as follows:
Too many loan rejections can have a negative effect on your credit score. A good credit score will improve your chances of car loan approval. Therefore, make it a point to check your car loan eligibility online before applying for a used car loan.
Interest rate: The interest rate of a car loan differs depending on the type of car loan - new or used car loan. It also varies from lender to lender. The interest rate of a used car loan is determined based on the age and make of the car. The interest rate of a used car loan is higher than a new car loan due to the high maintenance cost and insurance cost, and the scarcity of spare parts of an old model of car.
Processing fee: Banks charge a small percentage of the principal loan amount as fee for processing your car loan. The processing fee is usually 2% in most banks. It varies with lenders. Some banks waive off the processing fee. It will be deducted from the principal amount at the time of car loan disbursal. Other charges levied by the bank for a car loan include prepayment fee, preclosure fee, and foreclosure fee.
Prepayment/preclosure fee: Banks allow borrowers to prepay a part or the whole of the car loan before the end of the loan tenure after 6-12 successful EMI payments. A penalty fee called the prepayment fee is charged for this allowance. The prepayment/preclosure fee is a certain percentage of the prepayment amount. The prepayment fee will vary depending on the stage of the loan tenure at which you are making the prepayment.
Foreclosure fee: In a car loan, the car acts as collateral. Therefore, when a borrower defaults on his or her car loan, the banks have the right to repossess the car and put it up for auction to compensate for the outstanding dues. This process is called car loan foreclosure. At the time of car loan disbursal, the borrower has to sign a car loan surrender letter issued by the bank. The surrender letter allows the bank to repossess the car in the case of missed EMI payments. Keep in mind, a car loan foreclosure will reflect on your credit report and serve as a red flag to future lenders. Therefore, make timely EMI payments to improve your credit score.
Loan tenure: As previously stated, car loans are repaid in EMIs over a specified loan tenure. The tenure of a used car loan is usually 1 to 5 years. It varies from bank to bank. The age of the car must not be more than 5 years at the time of purchase and must not exceed 8-10 years at the end of the loan tenure. Using the free online car loan EMI calculator that is available on the bank website or a reliable third-party website, you can choose a suitable loan tenure to save up on overall interest payments. A short loan tenure means higher EMI payments while a long loan tenure means lower EMI payments. However, the overall interest payment may be lower over a short car loan tenure.
Car loan EMI calculator: Car loan EMI calculations when done manually are prone to human errors and are time consuming. The online car loan EMI calculator can be used any number of times for free. The tool is simple and easy to use. All you have to do is enter the car loan amount, loan tenure, interest rate, and processing fee into the tool. Then, click on the ‘Calculate’ button to get instant and accurate results. In the case of a prepayment/preclosure or floating interest rates, you can input varying combinations of loan tenure, loan amount and interest rates into the tool to get revised repayment schedules.
Amortisation table: The car loan EMI calculator will give you a total breakdown of your car loan repayment schedule in the form of an amortisation table, a bar graph, and a pie chart. The amortisation table consists of EMI payments, interest payments, the outstanding due after each EMI payment, etc. It is a representation of periodic car loan payments. Based on the repayment schedule, you can create a monthly budget to maintain a low debt-to-income ratio. A high debt-to-income ratio can lead to defaulting on your car loan. The EMI payments should not exceed more than 50% of your income.
Car loan application can be carried out by 2 methods - online and offline. In the case of the online method, visit the bank website to download the application form. Fill up the form and submit it along with the necessary documents for identity, age, income, and address proof. The documents required for car loan application are:
In the case of the offline method, submit the duly-filled and signed application form along with the necessary documents at the nearest bank branch. A bank executive will verify the furnished details, process the car loan application, and approve or deny the loan based on eligibility. Upon approval, the car loan amount will be instantly transferred to the applicant’s bank account. Some banks offer pre-approved car loans and instant disbursal to existing customers to reward their loyalty.
Here are some top lenders providing used car loans in Chennai:
|Bank||Loan amount||Interest Rate||Tenure||Processing fee|
|HDFC Bank||Up to 3-6 times your yearly income or 100% value of the used car||11.50-17.50% p.a.||Age of the car at the time of loan maturity must not exceed more than 10 years, subject to a maximum loan tenure of 5 years||Rs.5,000 or 2% of the car loan amount, whichever is lower|
|TVS Credit Services||Up to 85% of the car price||13.1-15% p.a.||1 to 5 years||Rs.999 + GST|
|ICICI Bank||Up to 80% of the car price||10-17.65% p.a.||24 to 35 months||Rs.6,000 or 2% of the car loan amount, whichever is lower|
Enjoy what the Chennai landscape has to offer in terms of scenery by taking a long drive in your own car. Opt for a used car loan from a reliable bank to purchase a car of your choice. You can get used car loan for most makes and models of cars as long as the age of the car is not more than 5 years or the model is not discontinued.