9 Frequently Asked Questions about Used Car Loans
Taking a used car loans is a commitment. So it’s better to have a solid knowledge about loan procedure before applying. One must know and discuss financing so that one can negotiate an advantageous deal for oneself. Know the intricacy about used car loan before you sign the contract.
Quick tips while purchasing a used car
- Check Engine and Chasis number matches with the document papers
- Service history record to confirm that there is no major damage to the car
- Check all four tires to understand if there is uneven tread wear which might indicate suspension problem
- Test drive to understand efficiency of engine and brake functionality
- No verbal agreement or ordinary letter should be accepted from finance companies that there are no financial dependencies on the car. Proper form 35 should be considered
- Go to RTO office to ensure transfer of registration
How to get a used car loan?
Kindly navigate the below points to decide a satisfactory loan on car suiting your pockets.
Factors checked by banks
Banks consider vehicle cost and actual value of the car in the used market, year of a car manufacturer, and income earned. Banks usually offer lower rate whoever has salary account with the same bank. Some banks offer low rates if you are an employee of a reputed company. Your credit score determines one’s financial health so check Crisil score before applying for a new car loan.
Documents required
- One can apply for car loan online by submitting loan applications along with the below documents:
- Identity and Age proof- Pan card, Aadhar card, Driving license
- Address proof- Rental agreement, Aadhar card
- Income proof- Salary slip for last 3 months, form 16 Income Tax return submission
- It usually takes 5 to 7 working days to get the vehicle loan sanctioned.
Check prevailing interest rate online
One can compare the interest rates online offered by the various bank. After getting an idea about the low-interest used car loans, one can check the details with the concerned banks.
Can interest rate be negotiated?
One can negotiate the interest rate based on income earnings and showing a good record of previous loan payment. One can opt for fixed or floating rate as per one’s convenience.
Conditions which might lead to Loan rejection
Banks have lots of information using your PAN details. Banks can track defaulted EMI payments, CRISIL score, and existing loan. If the risk of lending is high, then banks might reject the loan approval.
EMI payment
One can pay EMI as per agreed amount with the Bank. Payment can be done through cheque or automatic electronic payment from the account. Defaulting more than twice would be considered as a defaulter. Banks have authority to seize the car.
What happens if the loan amount is paid early?
Banks levy a penalty charge of 2- 5% on the outstanding if the advance amount is paid to close the loan. Check policy with the banks for more details.
Hoping, that above points will help you to strike a good deal with the banks. May you enjoy driving your own car with peace of mind!
