With the availability of a variety of cars at affordable prices, the Indian automotive industry has reached an all-time high 5.17 million unit production figure in 2018. There are several advantages to buying a car with a personal loan. Unlike secured advances, personal loans are collateral-free credits, thus preventing your car from being seized in case of default.
You can also choose to use the loan amount to fund the purchase of a used car as the prices of these cars are lesser than a newly manufactured car. Before you plan to avail of a used car loan to make such purchases, consider the below points.
- Decide The Loan Amount
Personal loans provide a substantial amount of up to Rs.25 lakh for salaried individuals which you can use to fund the purchase of a car. While you avail a used car loan, consider evaluating the current market value of the vehicle and decide on the amount.
- Inquire About The Interest Rate and Other Charges
Before you avail a loan, consider inquiring about the personal loan interest rate. Also, ask about additional applicable charges such as processing fee, late payment charges, and EMI bounce fees.
- Check The Loan Tenor and EMI Amount
As the loan amount is lesser compared to secured advances, the tenor provided for such loans may be anywhere between 12 and 60 months. Thus, to make your EMIs affordable consider taking a low amount and an extended tenor. You can use a personal loan calculator to estimate your loan tenor and EMI amount before you apply.
As mentioned, personal loans have a shorter tenor, which can make your EMIs expensive if you avail a high loan amount. Thus, consider lowering the loan amount if possible to avoid paying higher EMIs. Make use of an EMI calculator to have a proper estimation of the payable installments.
- Study The Application Process
The first step to availing a loan is to know in detail how to apply for a personal loan. The standard application process is convenient and you can do so online. To apply, head over to the official website of your lender and fill an application form by sharing some personal details. Once you submit the application form, a representative from lenders like Bajaj Finserv will visit you to collect the above-mentioned documents. After the papers reach your lender, you will receive instant personal loan approval and your amount will be disbursed accordingly.
- Meet the Eligibility Criteria and Documentation Process
To avail a used car loan, applicants have to meet eligibility criteria which are:
- You have to be between the age range of 23 and 55 years.
- You have to be a permanent resident of India, residing in the areas where your lender operates.
- You should have a regular and stable source of income.
- You should have a CIBIL score of 750 and above.
The standard documents required for availing a personal loan are:
- KYC documents such as Aadhaar card, PAN card, driving license, passport, and voter ID.
- Address proof: such as electricity bill and telephone bill.
In addition, you will have to provide bank account statements of the last three months and a passport-sized photograph.
Several financial institutions and NBFCs provide such loans against minimum documents. Bajaj Finserv is one such NBFC that offers personal loans at an attractive interest rate with minimal pre-payment and foreclosure charges. They also provide instant approval, online account access, flexible tenors and many other benefits.
Financiers like Bajaj Finserv additionally bring pre-approved offers to make the application process fast and hassle-free. These pre-approved offers are available on secured advances like home loans and unsecured credits such as personal loans and business loans. You can check your pre-approved offer by sharing minimal details like your name and phone number.
Apart from the above, consider collecting information on the specifications of the car and decide your loan amount accordingly. To ensure a safe and smooth journey, evaluate the condition of the vehicle before you buy a used car. Refrain from buying cars that are too old as it would require significant repair and increase your expenditures.