Reasons why people prefer to take used car loans

For self-employed applicants

• The minimum age is 21 years when the loan is given.
• The maximum age is 70 years when the loan period ends.
• The net yearly income may need to be between ₹2 lakh and ₹3.50 lakh.
• You should have been running the same business for at least 2 years.

For self-employed businesses or organisations

• The yearly business income may need to be between ₹2.50 lakh and ₹3.50 lakh.
• The business should have been running for at least 2 years.
• The latest 2 years of ITRs and audited financial statements may be required.

*T&C Apply

b) Salaried Individuals:

• Resident & Non-Resident Indians

• Aged between 21 and 60 years

• Minimum 1 year of experience

• Must earn a minimum of ₹1.8 lakh per annum

Hence, these are the used car loan eligibility criteria provided by the different lenders to the borrowers. 

What are the pros and cons of used car loans? 

There are multiple benefits for used car loans discussed above in this blog, but what about risk? One needs to consider the risks of a used car loan before considering it by just picturing its benefits. 

Here are the pros and cons of the used car loans:

Pros of used car loans

• Lower car cost: A used car may cost less than a new car, so you may need to borrow a smaller amount.
• Less depreciation: A used car may have already gone through some of its initial fall in value.
• Lower insurance cost: Insurance may cost less for a used car because its value may be lower than that of a new car.
• Can help with credit: Paying your loan instalments on time may help you maintain or improve your credit record.

Cons of used car loans

• Higher interest: Some lenders may charge more interest on a used car loan.
• More money from you: The lender may not cover the full car cost. You may need to pay the rest yourself.
• Shorter loan term: Some lenders may give a shorter time to repay the loan. This can mean higher monthly payments.
• Repair costs: An old car may need more repairs or servicing. The cost may depend on the car's age and condition.

Hence, these are the pros and cons of used car loans. 

Bottom line:

If you are planning to buy a used car, first check the car’s price, age and condition. Then look at the loan amount, interest rate, fees and repayment period offered by different lenders. Check the eligibility rules and documents needed before you apply. Also work out the monthly instalment to see if it fits your budget. You can compare used car loan options through LoansJagat before making your choice. This can help you review different lenders and their loan terms in one place.

FAQs:

What is a used car loan? 

A used car loan is the loan taken to buy second-hand cars; this generally does not affect savings as much as when the first new car is bought. 

Are used car loans also known as pre-owned car loans? 

A used car loan is usually known as a pre-owned car loan. 

Does one need to qualify for the eligibility criteria to get the pre-owned car loan? 

Borrowers need to meet the lender’s eligibility criteria when applying for a pre-owned car loan, while the final approval may also depend on other factors considered by the lender. 

Does it matter if you buy a second-hand car instead of a new car? 

In financial terms, it may matter because buying a second-hand car can be more financially convenient than buying a new car, which may hurt your savings. 

Is eligibility the same for all the banks providing used car loans? 

Eligibility varies from one lender to another, who will provide you with the used car loan. 

Can I consider a secondhand or used car as a depreciating asset? 

Generally, second-hand cars are considered a depreciating asset because the car has started losing its value over time in comparison to a brand-new car. 

Are car loans and used car loans different? 

Yes, a new car loan and a used car loan are significantly different. A new car loan and a used car loan may have different interest rates, eligibility criteria, and other terms depending on the lender.

Is a used car loan a secured loan? 

Usually, used car loans are secured, but it totally depends on the lender and financing product you choose. 

Is the car loan secured? 

Car loans can be done in both ways, secured and unsecured, as an unsecured car loan requires using an alternative financing path rather than a traditional auto loan.

What will happen if I fail to repay the instalments of used car loans? 

Missing your payments typically leads to late fees, collection calls, and a drop in your credit score.