Second Hand Car Loan Interest Rates Eligibility And Documents

A used car loan is an ideal solution if you want to buy a pre-owned vehicle and require financial assistance. Most banks and NBFCs offer attractive interest rates on second-hand car loans. Some lenders provide loans of upto 100% of the car’s value. Both self-employed and salaried individuals can avail of a second-hand car loan.  

Top Used Car Lenders: Finding Financing for Your Pre-Owned Vehicle

 

Second Hand Car Loans - Features and Benefits

• The loan amount obtained will be less when compared to a new car loan.  Thus, your monthly EMIs will be low. 
• Long repayment tenure. 
• Certain banks and NBFCs provide upto 100% financing 
• The loan application process is hassle-free and can be done online. 
• The insurance costs and depreciation rates are lower compared to a new car. 
• Minimal paperwork is required
• Some banks and NBFCs offer flexible repayment tenures and terms.  

Second Hand Car Loan Eligibility 

Banks and NBFCs set certain eligibility criteria for second hand car loans. These criteria vary across both salaried and self-employed individuals. 

• Salaried employees: 
  • Age Limit: 21-65 years
  • Income: Minimum of Rs.15,000 per month
  • Income Status: You must be working in the present organisation for at least a year
• Self-employed Individuals: 
  • Age Limit: 25-65 years
  • Income: Must make a minimum profit of Rs.1.5 lakh annually 
  • Income Status: Must have been in the same domain of business for at least 3 years

Second Hand Car Loan Interest Rates

Second-hand car loan interest rates vary across lenders. For instance, SBI offers interest rates ranging from 11.40% p.a. to 14.90% p.a. Axis Bank, Punjab National bank, and HDFC offer interest rates in the range of 13.55% p.a to 15.80% p.a., 9.80% p.a. onwards, and 13.75% p.a. onwards (Rack Interest) respectively. 

Documents Required for A Second-Hand Car Loan

The list of documents is as follows: 

• Application form 
• Passport size photographs
• Car valuation report
• Identity proof: Any of the documents mentioned below can be furnished as identity proof.
  • Aadhaar card
  • Passport
  • Voter's ID
  • Driving license
  • PAN Card
• Address Proof: Any of the documents mentioned below can be submitted as address proof 
  • LIC Policy
  • Electricity bill
  • Aadhaar card
  • Driving License
  • Ration card
  • Passport
• Income Proof: The documents mentioned below must be submitted as proof of income. 
  • Profit and loss account
  • Audit sheet
  • Form 16
  • Balance sheet
  • Salary slip
  • Bank statements

Disclaimer: The documents mentioned above are in general. Please contact the bank for any additional documents required. 

Second-Hand Car Loan EMI Calculator

A used car loan EMI calculator helps you calculate the monthly payments or EMIs easily. Besides being convenient to use, the calculator minimizes the time required to compute EMIs. Once you enter the details asked for such as the rate of interest, loan amount, processing fee, and repayment tenure, the result will be displayed instantly. In most calculators, the amortization schedule is also shown. 

Example: Jim is looking to purchase a pre-owned car for himself. He is looking to avail a loan of up to Rs. 7 lakhs for a tenure of 4 years at an interest rate of 13.55% given his credit score is around 750. The EMI he will have to pay are given below:

Then, the monthly EMI is: Rs. 18,971

Principal amount: Rs. 7 lakhs

Total interest: Rs. 2,10,603

Total amount: 9,10,603

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How to Apply For A Second-Hand Car Loan? 

You can apply for a second hand car loan either online or offline. 
 

Online Method:

In this mode of application, you should visit the official portal of the bank and enter the details asked for such as your name, mobile number, email ID, etc. Once you provide the relevant details, a bank representative will contact you to process the request.

Offline Method:  

• Visit the bank branch or NBFC office where you would like to avail of a loan. 
• Fill in the application form
• Submit the required documents to check if you are eligible for the loan. 
• Discuss the interest rates, processing fees, etc. with the lender to process the loan. 

Things to Keep in Mind While Applying For A Second-Hand Car Loan

• The interest rates for a used car loan are higher compared to that of a new car loan.  
• Some NBFCs and banks do not give a loan if the car is more than 3 years old. 
• The cost of insurance will not be covered in the loan amount. 

Things To Do While Applying For a Used Car Loan

• Check the Car: Check if the car is in good condition. You can verify with the help of a mechanic. You can also drive the car in a place with less traffic to check the vibrations. 
• Check the papers thoroughly: It is important to check the related documents like the insurance papers and the registration certificates in detail carefully. Check if the engine number and the chassis number on the car match the ones specified on the copies. It is also essential to check if the car has had any accidents.
• Registration Certificate transfer: Once the car has been bought, ensure the registration certificate (RC) is transferred to your name. An NOC is required if the car is registered in another state or if it has been bought on a loan by the previous owner. 
• Service the car: It is important to start using the car only after doing a complete service. Change the fluids and clean up the car before using it for the first time. In case of any rust, you must fix it. 
• Insurance transfer:  The car insurance policy must be transferred to your name immediately. The insurance policy is null or void if it is in the previous owner’s name even if the registration certificate is in your name. 
• Vehicle History: It is important to check the history of a vehicle before deciding to purchase it. Checking the vehicle will help you become aware of the car completely. You will come to know if there have been any accidents or service issues with the car. You can find the details about a car online. 

FAQs on 2nd Hand Car Loan Interest Rate 

1. Can you get a bank loan for a second-hand car?

Yes, you can get a loan for a second-hand car from a bank, NBFC, or even a fintech platform. The first thing that you have to check is the interest rate of the loan. The interest rate on loans for used cars is usually higher than that of loans for new cars.  

2. Will there be any foreclosure charges?

Yes, many lenders charge a penalty for foreclosure or pre-closure of the loan.