Quick Guide on Pre-Owned Car Financing

Over the last few years, the Indian used car market has been growing steadily; mainly so because of the increase in the purchasing power of India’s middle-class consumers. With better income, more and more people are aiming higher than owning just a two-wheeler and buyinga car without breaking the bank.
 
Pre-owned car’s make a lot of sense as they offer the same benefits as a new car but at a much more affordable price point. These benefits get compounded when one switches from a two-wheeler to a used car as it offers:

a.  Comfort
b.  Safety
c.  Protection from weather
d.  Higher seating capacity
e.  Larger storage space
 
Some people indeed hesitate before buying a pre-owned car as there is a chance that you might end up with a vehicle that is not correctly looked after. However, despite this fear, a used car still makes a better option mainly because:
 
a. Cost Benefit: Used cars of good brands are available at nearly a fraction of their new car prices. You can save a lot of money, use your asset, pay off your loans quickly and use the spare money for better things.
 
b. Lower Depreciation: A car starts to lose its value the minute you drive it out of the showroom. A major bulk of depreciation happens in the initial days which make older cars depreciate slower.
 
c. Cheaper Insurance: A new car has a higher price tag and therefore, higher insurance costs. An older car is insured at its depreciated value, making insurance cheaper.
 
d. Reliability and Performance: Used cars offer similar reliability and performance as new cars, especially if they aren’t more than 2-3 years old.
 
e. Extended Warranty: Some cars have extended warranties, or have an option to buy one at a later date. In either case, this helps in protecting your car and provides complete peace of mind.
 
f. Pre-installed Accessories: When you purchase a new car, you might want to install additional features such as alloy wheels, spoilers, bumper guards etc. Such installations are quite costly. Though, when you buy a used car, you get all or at least some of these accessories pre-installed and don't have to pay extra for them.
 
g. Help Environment: Cars manufacturing and early shipping process release a big volume of CO2 emissions. Therefore, by choosing a used car over a new car, you not only save money but also save the environment by reducing your carbon footprint. 
 
Also Read: Things You Need to Consider Before Buying Your First Used Car

Features and Benefits of Pre-Owned Car Loan

 
Not only the used car but pre-owned car loans also have numerous benefits. Some of the features and benefits of second-hand car loans are: 

• High Loan Amount:

When you apply for a pre-owned car loan, you can get approved for the fund amount ranging between Rs 50,000 and Rs 5 lakh. However, the loan amount is determined by various factors.Make sure you check your eligibility using a pre-owned car loan calculator.
 

• High LTV: 

Used car loans come with a higher LTV. Based on the car model and age, you can get up to a maximum LTV of 90%. 
 

• Flexible Tenure:

Purchasing a car is an expensive endeavour. As a result, many lending institutions offer loan repayment flexibility so that you can easily manage your budget and make on-time EMI payments. A pre-owned car loan has a maximum repayment period of 5 years.
 

• Quick Approval:

Sinceyour newly bought second-hand car is hypothecated with the lending institution, the lender does not take long to assess the risk associated with your profile. As such, you can get your pre-owned car disbursal within 48 hours.
 

• High Refinance Value: 

If you are timely paying your pre-owned car loan, you can easily apply for a used car refinance loan or a top-up loan on the used car. The advantage of refinancing is that you can get a loan for up to 175% of the value of your old car.
 

Used Car Loan Eligibility Check 

Do you want to get a pre-owned car loan to buy your dream car? Before applying for a loan, you should make sure you meet the following eligibility requirements.
 

1. The loan applicant should be an Indian resident
2. Should be above 18 years of age
3. Should be employed or own a business
4. For an employed applicant, the employment should be for a minimum of two years and he/she should have spent a minimum of 6 months at the present job
5. Business owners should have been in the current business for a minimum period of 1 year
6. Documents requiredfor a pre-owned car loan:

• Identity proof
• Address proof
• Proof of income
• Two Passport size photographs

 
Also Read: Guide to Financing Your NEW Used Car!
 

 

How to Apply for a Pre-owned Car Loan?

 
You can apply for a pre-owned car loan either online or in person at your preferred lender’s branch office. To apply for a Hero FinCorp’s used-car loan, follow these steps:
 

Hero FinCorp Offline Process:

 

• Visit the nearest Hero FinCorp branch office or outlet and get in touch with the representatives who will assist you in the process.

 

• To determine eligibility, submit the required documents.

 

• Depending upon your submitted documents, Hero FinCorp will determine the used car loan amount, interest rate, tenure, and processing fee. They will also get the EMI table ready for you.
   

• After you have agreed to the loan terms and conditions, submit a duly filled loan application form along with all mandatory documents.
   

• Post verification of your documents, the loan will be disbursed within 24-48 hours of your application submission.

 

Hero FinCorp Online Process:

 

• Visit Hero FinCorp used car loan webpage.

 

• Check the qualifying criteria section on the website to see if you qualify for a pre-owned car loan.

 

• Calculate your monthly EMI obligations using an online used-car loan EMI calculator.

 

• Click on the ‘Apply for a Loan’ tab and fill in the required details. Click on ‘Apply Now’.

 

• After successful assessment of your application, Hero FinCorp executives will get in touch with you for further detailing. 

 

Factors Affecting Your Pre-ownedCar Loan Approval 

If you are considering applying for a used car loan, be sure you understand the elements that determine pre-owned car loan approval and interest rates. If you discover that you lack any of the contributing factors, work on improving them before applying for the loan.
 

• Used Car's Age: 

Cars depreciate quickly, especially when they are new. If you acquire an older car, the lender may not be able to recoup the loss if you default on your pre-owned car loan. As a result, the car's age is critical in deciding your loan approval.
 

• Car's Condition: 

What if you are buying a used car that is only a year old but has been in multiple accidents? The lender does not consider cars that are in poor working condition. To assess the condition, they check the car's insurance claim history and service records. As a result, if your car is in poor condition, your prospects of getting a loan are minimal.
 

• Car Documents: 

Before applying for a pre-owned car loan, make sure the car has a clear ownership title, check for the car's RC papers, insurance papers, original sales invoice, service book etc. If you don't have all the required used car documentation, the lender will deny your application for a used car loan.
 

• Credit Worthiness: 

You don't need a high credit score to avail a used car loan. However, this does not imply that the lender will accept a profile where the borrower has defaulted on previous obligations or has a history of missing EMI payments. So, before you apply for a loan, double-check that your credit score qualifies you for used car finance.
 
For most of us, buying a car is a big decision and the buying experience isincredibly exciting. However, it is equally important to select the rightfinancial institution that will provide you with the required finance and flexibility without burdening your existing financial commitments. Used cars loans are cheap, quick to avail of and easy to repay. They are also the most convenient way of financing your dream car while maximising happiness.To make the most out of your pre-owned car loan, always check your EMI obligations beforehand by using the pre-owned car loan EMI calculator. 
 
If you are planning to buy a pre-owned car and require financing, then contact us today.
 
Disclaimer: This post was first published on 13th Feb 2018 and has been updated for the latest information, freshness, and accuracy.