Used Car Loans

What is a Used Car Loan?

Used car loans are meant for individuals who want to buy cars that have been previously owned by someone else. Usually, used cars have more value on them, depreciate more slowly, come with lower insurance, costs less to register and since they are used, they cost less than new cars which ultimately means you have to borrow less. A lot of dealerships sell these used cars and many of them have used cars in good and reliable conditions.

What kind of interest rates can you get on used car loans? 

There are various factors that come together to determine the interest rates on used car loans. Although the interest rates do fall within the range of 13.5%, the interest rate is determined by factors such as; 

  • Your credit score
  • The type of car and age of the car.
  • Your employment status and income level is used to determine your ability to pay back.
  • Your age.

What is the maximum amount of used car loan you can get? 

You can get a used car loan up to 90 percent of the value of the used car or even the complete value of the used car in special cases.

For how long can your used car loan span? 

Used car loans could span a duration of up to five years or seven years. The duration is usually dependent on the maximum age of the car at the time the loan matures which is nine years.

How do you know if you are eligible for a used car loan? 

  • If you have a salaried job with steady flow of income.
  • You are self-employed with proof of steady flow of income.

Loans are usually extended based on the used car’s value under the principle of the loan to value ratio. The ratio of loan to value could be as high as 90 percent or even 100 percent which is determined by vehicle model and the category your salary level forms. 

What documents do you require? 

There are certain documents which you need to submit alongside your application for the used car loan. These documents are listed below;

If you are a salary earner

  • Proof of address
  • Proof of signature
  • Bank statement of three months
  • Photograph
  • Salary slip or form 16

If you are self-employed

  • Company ownership documents to include registered deed of partnership, certificate of incorporation, memorandum and articles of association amongst other documents linking you to the ownership of the company.
  • Certificate of commencement of business.
  • Photograph
  • Proof of address and PAN Card.

To get a used car loan is pretty simple. All you need to do is be able to convince your lender that you have the means to pay back the loan and provide the necessary documents. Getting the used car loan should be a breeze once all documents have been provided. Do you due diligence on your choice of lender and pay utmost attention to the fine print too.