I’d like to get an used car that’s worth of Rs. 6,50,000/- Do banks offer loan for used cars? If yes, can the interest rate, down payment, processing fee and repayment tenure be bargained? Or the rates are fixed?
Yes banks do offer used car loan. HDFC and Kotak Mahindra banks have specific used car loan scheme (I am sure other banks do offer used car loan too). Most of the banks offer almost 90% of the value of the car as loan.
As far as bargaining on down payment and processing fee is concerned, they are certainly negotiable. However, it depends on your relationship with the bank. If you have been banking with any specific bank for couple of years, you can negotiate on these charges. Banks also honor their old customers. So for example, if you have been doing business with ICICI bank, you may like to avail the loan from ICICI bank itself and negotiate. Since the bank knows your history, they may respond favorably.
The interest rates are usually fixed for most of the customers. If the volume of transaction is high in specific customers’ cases, banks may relent to reduce few basis points.
Yes, banks like SBI, HDFC bank, Bank of Baroda etc offers loan to buy a used car. The interest rate on buying an old car is usually 2 to 3 % higher than the new car loans. The present interest rate for used car loan is around 12 to 15 % Pa depending on the banks and financial institutions. The loan to value (LTV) allowed over the used car is 75-85% of the assessed market valuation. Most of the banks allow a used car loan for maximum 5 years old vehicle however you check some of the NBFCs then you might get some relaxation. The required margin to such loan is around 15 to 20%. Apart from above, following are some more criteria required to avail a used car loan:
- Maximum tenure for a used car loan in most of the cases is 7 years however it may vary on the vehicle’s existing status.
- Processing fee may vary from .5% to 1.5% depending on banks/FIs
- The age ceiling for applicant is between 21 to 65 years
- Normally the minimum net annual income to avail such loan is Rs 1 Lac.
- Maximum loan amount allowed ranges around 2.5 times to 5 times of the net annual income, depending on the norms of banks/FIs
- The common documents required at the time of loan application are:
o Banks statement for last 1 years
o Two passport photograph(Colored)
o Identity proof such as passport, driving license etc
o Address proof such as voter id card, passport etc
o Pan card
o IT return for 2 years in case of salaried and 3 years in case of self employed/Businessmen
Getting a Used Car Loan has become far simpler and many banks offer good interest rates and deals. Nowadays, getting a loan for a pre-owned car is a lot easier than it used to be. The easy availability of loans for used cars along with a wide range of buying options have all helped the pre-owned car segment rise exponentially in the recent past.
You need to keep in mind that the Interest rates offered on Used Car Loans are usually around 3-4% more than that for new Car Loans. The loan offered for the purchase of a second-hand car also ranges between 60% and 80% of the value of the vehicle.
However, there are a host of things you need to consider before applying for a Used Car Loan. Click here to read more.
If you are convinced about getting a Used Car Loan, click here to read all about eligibility and other requirements.
Click here to apply for a Car Loan.
Used car loan in simple words is a loan for the second hand purchase of any car.
Banks do provide loans for financing second hand cars. But you need to stick to their terms and condition policy for finance. You can also check the EMI, lending loan amount and your eligibility on the banks website in Car Loan column.