Owning a four-wheeler has become more of a necessity than a luxury in the 21st century. Right from day-to-day use, occasional use or even for any emergency cases, every person wishes to have a car of their own. Although there has been a decrease in the sales of new cars, the sales of pre-owned cars have seen a significant rise in 2019. So here is a guide for all the second hand car loan.
Growth in Second Hand Car Market
In the Financial Year of 2019, the second-hand car market saw sales of around 4 million. This number is 1.2 times the sales made by the new car market. One of the main reasons for the growth is that people want to shift to newer cars sooner and do not want to invest a bigger amount in a new car. Also, as the usage of a new car increases, the car becomes older and the value also depreciates. Therefore, the resale value of new cars goes down and becomes affordable for second-hand car owners.
Eligibility for Second Hand Car Loan
Since there has been a rise in pre-owned car sales, there has been a significant rise in people taking loans as well. There are some criteria to be met to be eligible for getting the loan approved and they are:
- The applicant must be a resident of India.
- The applicant must be at least 21 years of age and under 65 years.
- The applicant should have a minimum income of at least INR 15,000 per month, in case of self-employment, the profit should be of 1,50,000 INR per annum.
- The applicant must have a stable job either in the form of self-employment or must have working experience of 2-3 years.
- Proof of Address and history of previous loans as well.
Interest Rates for Used Car Loans
The interest rates are dependent on many factors such as the loan amount, loan period, borrower’s background and also varies from one loan provider to another. Usually, the interest rates are between the range of 9.00% to 13.00%. Though the interest rates can go as high as 17%. The most common loan tenures vary between 3 to 7 years.
Useful Tips For Getting the Best Loan
- Good Credit Score: Having a good credit score is a very important factor as this shows your history of loan repayments and the ability to repay the loan. Credit Score is also commonly known as the CIBIL score.
- Research and Compare: There are service loan providers in the market. Some have small tenures with high-interest rates or the other way around. There has also been an increase in online loan platforms to make the process quicker. So, choose the best plan based on your needs.
- Referral from Friend or Family: Having a referral or recommendation can help you in reducing the interest rates by a small margin or can help you even if you have a comparatively bad credit score.