If you have narrowed down on buying a second-hand car, chances are, you will require a used car loan. And, factors such as income, outstanding loan, credit score, and work stability will affect your loan approval.
For a hassle-free process and affordable used-car loan interest rates, make sure you spend some time researching the ideal lending institution for you.
Check out the eligibility criteria and documents needed to borrow a used car loan in India.
- The individual has to be in the 21 to 65 age bracket.
- Salaried individuals must earn at least Rs. 20,000 per month and self-employed individuals Rs. 2 lakhs per year.
- Self-employed applicants must have a running business for at least three years, and salaried applicants must have a minimum work experience of one year.
For verification and credibility check, applicants have to submit a list of documents to their lending institution. Some of the commonly required used car finance documents are:
- Income proof
- Salary slips
- Photo Identity proof
- Address proof
- Mobile/telephone bill
- Vehicle registration certificate
- Copy of signature with a proof copy
Moreover, the list of documentation for a used car loan has variations for self-employed and salaried individuals. These include:
- Applicants signature copy with signature proof
- Address proof such as bank statements, tax receipt of property, property registration documents, utility bills, or Voter’s ID
- ITR with profit and loss statements, audited balance sheet, and three months prior banks statements
Self-employed through partnership
- Three-month bank statements, profit and loss statements, and audited balance sheet as proof of income
- Proof of business through registered certificate of incorporation/ Partnership Deed of private and public limited companies
- Ownership certificate, i.e. registered certificate of incorporation/Partnership Deed of private and public limited companies
- Income proof such as the previous three months’ bank statements, audited balance sheet, ITR documents, and profit and loss statement.
- Salary slips of the past three months
- Address proof like electricity bill, ration card, or passport
- Registration certificate of vehicle
Benefits of used-car finance
- Used car loans help ease the financial pressure during the purchase, and since the loan amount is usually low, the EMIs won’t put a strain on your monthly budget.
- The procedure to apply for the loan is quite simple and can be completed online.
- Lenders offer adjustable repayment terms and process this loan with minimal paperwork.
In a nutshell
All you have to do is keep the list of required documents ready and up-to-date to proceed with your pre-owned car loan application. Along with these, refer to the used car loan eligibility criteria to understand what is mandatory, and you are good to go.