Cars have become a necessity in today’s age. However, affording a new car might not be possible for every individual and so used cars are popular. People prefer used cars either because of lack of affordability or for practicing their new found driving skills before investing in an expensive model. Used cars are, therefore, quite in demand. However, a loan is sought by most used car buyers to finance their purchase. Which type of loan, do you think, helps in the purchase of used cars?
A personal loan helps. Yes, though there are second-hand car loans available in the market, personal loans are still the better alternative for financing a used car. Here’s why –
- You can get the full value of the car as loan
When you avail a personal loan, you can avail a loan for the full value of the car which you intend to purchase. In case of second hand car loan, there is a margin and only 60% to 80% of the car’s value is financed by the loan. Moreover, if the car is old, the amount of loan is further reduced. This is not the case for personal loans. If you have no funds in hand or even if the car is quite old, a personal loan proves to be the best solution for financing the car.
- You get a flexible repayment tenure
Personal loans allow you to repay the loan within 5 years. As such, you can choose your repayment tenure and repay the loan in a flexible and affordable manner.
- No collaterals are required
It is a well-known fact that personal loans are collateral-free loans. You don’t have to mortgage any asset to avail a loan. You can get a loan simply on the basis of your income.
- The loan has multi-purpose use
One of the best features of personal loans is that the loan is multipurpose in nature. You can use the loan for any financial requirement, no questions asked. When you avail a personal loan for a used car, you can not only use the money to buy the car but also for customising it. If you avail a higher amount of loan you can use the spare funds for adding the required accessories to the car, changing the existing seat covers or for any other changes you want to make to your car to make it personalised.
So, personal loans help in buying a used car. But, before availing the loan, go through the following checklist –
- The eligibility criteria
Check the eligibility criteria of the loan to know whether you qualify to avail it. Common criterion include the following –
- Your age should be 21-65 years
- Your monthly income should be at least INR 20, 000. If you, however, live in a semi-urban area, an income of INR 15, 000 would be enough
- Your work experience should be at least 3 years
- You should be employed in the current organisation for at least the last 6-12 months.
- Your credit score should be at least 650
- Find out the eligible loan amount
The amount of loan available to you depends on your eligibility qualifications. So, check the amount of loan you qualify for.
- Keep your documents ready
Your identity proof, address proof, income proof, bank statement, etc. should be kept handy for submitting them with the application form.
- Find out the applicable interest rate
Before availing the loan, know the interest rate charged as it determines your loan EMIs.
Once you have ticked all these items on the checklist you can go ahead and avail a personal loan for a used car. Since personal loans are available easily, don’t let your desire to own a car remain a dream.