Car Loans for Used Cars
A car is an essential part of day to day routine that holds great significance in a man’s life. So, if you are planning on buying a new car and running low on your budget, but still can’t take your eyes off the new SUV then car loan is the perfect solution for you. Now you can buy your dream car by purchasing a used car at a lower price. Car loan on a used car has a bit lenient eligibility criteria, which doesn’t have any specific age limit or loan limit. A used car is relatively less expensive than new cars, which makes them an affordable option.
A car loan is a short-term loan, which allow applicants to purchase a used car too. Car loans usually have a low-interest rate, compared to other loans as the car brought by the applicant is put as collateral against the loan. It is a form of secured loan in which the applicant’s purchase acts as the collateral for the loan. The borrower or the bank remains the lien holder of the car, till the applicant makes the full repayment of his or her loan. In case the applicant fails to repay the loan, the car is taken over by the bank and is put out for auction.
Note that interest rate on a used car loan is relatively higher than the one on a new car. Car loan for a used car only covers the initial value of the used car on road. All the additional cost of registration transfer and documentation needs to be borne by the applicant himself. The bank or borrower doesn’t take responsibility for any fraud or damage in these used cars, because of the lack of security involved in a second-hand car.
Features
- Car loan on a used car doesn’t just help in sustaining your savings but it also helps in helping you purchase your dream car, be it an Audi or Honda City, at a lesser value. Earlier banks didn’t like investing in used cars, but the loans popularity has motivated several banks to join the trend of offering this loan.
- Unlike purchasing a new car, which involves a lot of paper work like getting a number plate, registration charges, pollution papers etc. Buying a used car, helps in minimizing this paper work, this usually involves registration transfer documents.
- Car Loan on Used cars is has a higher interest rate, because of the insecurity involved in it. The car being the lien property of the back till the repayment of the loan by the applicant will be stuck with the bank if the applicant damages the already old car, and fails to repay the loan, leaving no scope for auction or resale.
- Car loan on a used car, despite being a bit risky for the borrower is a form of secured loan, as the applicant’s purchase acts as collateral against the loan.
- You can increase your chance of getting a car loan; by maintaining a good credit score. A good credit score ranges from 350 to 800. Higher credit score determines high repayment capacity while lower credit score implies poor repayment capacity.
- Car loan for used cars has a lower tenure period as they are usually valued at a lesser price. Most banks in the country offer above 85% value of the used car in the form of a loan.
Benefits
- Most borrowers or banks in the country offer a flexible tenure period ranging from 5 to 10 years, giving enough time to the repay the loan without turning into a financial mess.
- Applicants can avail almost 100% financing on a wide range of used cars.
- Most banks in the country offer loan amount up to Rs 3 Crores for car loans with competitive interest rates, plus without any hidden charges.
- Car loan for used cars, allows the user to make easy repayment option in the form of monthly installments or EMIs. These installments include the principal amount and interest rate of a loan. Applicants can select an appropriate amount of monthly payment, according to their preference while signing the loan agreement.
- Applicants get a choice to choose between fixed interest rate and variable interest rate while applying for a loan. A fixed interest rate remains constant through the loan tenure, while the variable interest rate is subject to change according to the changes and trends of the market.
- Applicants can potentially reduce the loan amount on the used car by making an initial deposit through cash or trade in during the purchase of the car. This can also help in reducing applicants EMI’s value.
Interest Rates of Top 5 Banks Offering Used Car Loans:
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Banks
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Interest Rate
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Prepayment Charges
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Processing fees
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Loan Amount
|
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PNB
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11.20%
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Nil (2% on Prepaid amount)
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1% of Total loan (max Rs 6000)
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Up to 85% according to the road price
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SBI
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12.65%
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No foreclosure charges
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Nil
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Up to 85% according to the road price
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ICICI
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10.25% - 18.51%
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6% after 1 year
5% after 2 years
3% after 3 years
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2% or Rs 6000 (whichever is lower)
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Up to 100% on market value on road
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HDFC
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11.50% - 17.50%
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6% after 1 year
5% after 2 years
3% after 3 years
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2% or Rs 5000 (whichever is lower)
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Up to 100% of ex-showroom price
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Axis
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14.50% - 16.25%
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10% till 180 days
5% after 180 days
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Rs 3500 – Rs 5500/-
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Up to 90% of ex-showroom price
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**The banks are ordered based on the lowest interest rate.
Top 5 banks with best Car loan schemes for Used Cars in India
- State Bank of India
State Bank of India has probably hundreds of branches spread across the country, which makes it an ideal bank to invest in. SBI is known for its branches and staff. The bank is also popular for its long queues, but that also signifies that people feel secure while investing in this bank. SBI being a public bank is known for its lowers interest rates and affordable schemes, which makes it so popular amongst middle-class people. SBI charges interest rate starting from just 9.65%. Applicants can avail for 85% value of the used car in their loan. The bank also doesn’t charge any foreclosure fees, which makes it a perfect choice. SBI offers a tenure period up to 7 years to its used car loan applicants. Unlike most other banks State Bank of India also doesn’t charge an additional fee or processing fee for disbursement of the loan.
- Punjab National Bank
Punjab national bank seems to be making a name for itself in the loaning sector, by offering some exclusive schemes. Punjab National Bank charges an interest rate from 9.60%. Unlike other banks, PNB offers loan on used cars, which is only 3 years old. The bank doesn’t take responsibility of pre-owned cars which are older than 3 years. An applicant should have a minimum salary of 20,000 or above to apply to apply for a car loan. PNB allows a tenure period till the 60 EMI’s till the full repayment of the loan. PNB charges interest rate over 9.40% percent for a loan on pre-owned cars. It also charges 1% processing fee, with a maximum amount of Rs 6000, or whichever is more. Applicants can avail for a loan amount up to 85% through Punjab National Bank. They also charge 2% prepayment charges, if the applicant chooses to repay the loan before 6 months.
- Axis Bank
Axis is one of the most popular banks in the country. The bank is known for offering some amazing discounts on shopping deals. However, the bank does demand a high-interest rate from 14.50% - 16.25%. Axis also charges a processing fee from Rs 3500 – 5500. The bank only avails loan above 1 lac on pre-owned cars but offers almost 90% value of the used car. Prepare yourself to pay for some hefty pre-payment charges as Axis charges 10% on the remaining loan amount, if the user plans on repaying the loan in advance before 180 days of the loan disbursement, after 180 days the bank charges only 5% prepayment fees. Axis bank only offers a tenure period of 5 years, for the repayment of loan unlike other banks in the country. An applicant might consider it as a bad choice because of the shorter tenure and higher interest but the bank service is exceptional commendable which makes it worth every penny.
- HDFC Bank
You will not get better customer care service than HDFC anywhere in India. The bank has a very professional staff which strives towards delivering maximum customer satisfaction. HDFC charges an interest rate of from 11.50% - 17.50%. The best offer that will motivate applicants to opt for HDFC is that it allows applicants to avail 100% loan amount on the vehicle. HDFC bank also charges a nominal processing fee of 2% or Rs 5000, depending on which one of these values less. HDFC also offers a tenure period of 7 years, which gives applicants ample of time to repay the loan in time. However, Applicant might develop a bitter taste for the bank because of its high pre-payment fees which are as follow 6% after 1 year, 5% after 2 years, and 3% after 3 years. You should invest in the bank if you are good at financial planning as HDFC offers unmatchable services and offers.
- ICICI Bank
Just like HDFC, ICICI also offers 100% loan amount for purchasing a new or pre-owned car. ICICI also offer car loan against the existing car of the applicant, which helps in reducing the interest rate. In order to know more about this offer, contact your nearest ICICI bank branch. Applicants can avail financing services from ICICI for a 7-year tenure. The bank charges an expensive processing fee of 2% on loan or Rs 6000 whichever is lower. ICICI bank charges an interest rate from 10.25% - 18.51% on pre-owned car loans. The bank also charges high pre-payment fees, 6% after 1 year, 5% after 2 years, and 3% after 3 years. ICICI is also a great option for availing for a loan. ICICI also has some great reviews for its customer services, which makes it an appropriate choice. You might want to contact the branch before investing in a new scheme as ICICI is known for offering some great combo deals on its loan services.
Basic Eligibility Criteria
- In order to avail a car loan, the applicant needs to either be a salaried employee or a self-employed professional, with a regular flow of income.
- Typically, the used car loan, like new car loans can extend up to 2.5 - 3 times the amount of the total annual salary for working individuals whereas self-employed professionals can apply for a loan over 6 times his/her annual income.
- There is no set loan limit for car loans, so an applicant is free to apply for Rs 10 lac loan or Rs 1 lac used car loan depending on his/her needs.
- Note that banks seek an official proof of your income source to validate your financial stability and creditability. So ensure to collect your revenue reports or your salary slips for the last annual year.
- Just like any other loan, an Applicant needs to have a credit score from 350 to 800, in order to avail a car loan smoothly. Credit Score determines the repayment capacity of an applicant. Applicants can check their credit score using the formula available online.
Documents Required
- Identity proof (any one): Voter’s ID, driving license, passport, PAN card, Aadhaar Card.
- Income proof: Bank statements, Latest Form 16, Salary Slips of last 3 months
- Employed Applicants - Bank statement of last 6 months with applicant’s latest salary slip. Make sure to update you pass books and your other bank documents.
- Self-Employed Applicants – A proof of the annual revenue of their business.
- Residence proof (any one): Passport, electricity bill, Voter’s ID, PAN card, driving license telephone bill or ration card.
- Proof of Liabilities: Lenders will want to keep a record of all your liabilities to ensure that the applicant will be able to repay the loan.
- Proof of Savings: List of assets and liabilities.
Why choose Indiashopps to apply for a car loan?
Exclusive Deals
Indiashopps is one of the best loan comparison sites in India. We have enlisted every bank in the country to help customers find the best car loan deals. These banks offer amazing schemes on used cars, which will make you want to apply for one right now.
Compare and Review
You can search, compare and choose between some of the most promising banks in the country. You can also do a more verified and customized research by adding filters in their search to find the best deal according to their preference.
Save Time and Energy
We have hacked the long loan application process to a 3 stepped process. All you need to do is provide details such as your name, address, required loan amount, income details and choose your bank as per your convenience.
Multiple Options:
You get multiple options to choose from at one go. You can even use our EMI calculator to choose you loan scheme at the specific interest rate with the required features.
Over 54 Banks and Deals
We have enlisted all the hottest car loan deals in the market currently to help our users in getting the best possible deal at the best possible price.
So, go ahead explore the banking world and their financing deals with Indiashopps.
How to apply at Indiashopps.com?
- Once you have selected the perfect used car loan deal of your choice, just select the ‘Apply Now’ green button given below the deal.
- After clicking on the button, our website will direct you to a Car Loan Application page. Just insert all your details asked on the screen, like applicants name, E-mail, Mobile number, loan amount, city and annual income.
- Once you have entered all these details click on “Apply Now”, and your application will be filed with our website.
- Now that we have stored your contact information, we will update you as soon as you application is approved by the respective bank.
