Choosing the Right Financing Option for Your Used Car in Delhi

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Car, Car Dealership, Car Salesperson.

A warm welcome to all future car owners! Let’s start the thrilling journey of possessing a car in the ever-bustling city of Delhi, strap up and get set for the ride!

Settling for a set of wheels involves unlimited twists and turns but keep calm! You have us, we will be your trusty sidekick, and help you navigate all the right financing options to buy pre-owned cars. 

Whether it’s a day trip to the Taj Mahal or a long night drive on the magnificent outer ring road, your car will make these experiences more memorable. So, let’s get started and help you get your first set of wheels!

First, Figure out your Budget and Requirements 

Let’s talk about your priorities 

Before the acquisition process gets on the floor, you have to know your priorities. Do you fancy a front sunroof or higher mileage? Are you a sedan lover or a hatchback partner? Make a list of all the must-haves to choose the one all-rounder car for you. 

Getting back, this piece will elaborately discuss all the financing options available for used car owners.  

Bank Loans

Availing a bank loan is the most popular way of acquiring a pre-loved vehicle. Financial institutions offer special loans for used cars, including premium cars. These loans may have a repayment policy of 1 to 5 years. However, used car loans are usually higher than the new car loans. 

Banks will critically analyze the chosen second-hand model, your budget, income source and other finance-related documents. After that, they will come up with a financial plan that includes interest rates and EMIs. 

If you agree to the bank’s lending terms, then you will be given the loan amount to purchase the car. Post that you only have to repay the installment amount timely.  As for the loan tenure, the maximum threshold is 84 weeks or seven years. However, some banks offer loan repayment tenure for more than 84 weeks, it all depends on the car you are buying.  

Make sure to go through the installment documents carefully to avoid higher interest rates.  

NBFCs

Non-Banking Financial Companies is another option to finance your car. NBFCs offer car loans at lower interest rates, making it an ideal choice for car finance. They offer customized financial plans as per the borrower’s financial condition. The base rate for NBFCs is based on the Prime Lending Rate and not on MCLR, so it offers more flexibility in keeping interest rates lower. 

NBFCs are popular for fast loan disbursal and approval, as they can bend their norms to fit into customers’ requirements. These loans can be approved in a matter of minutes and credited within hours. People with poor credit scores are often rejected by banks. However, these customers can avail of loans from NBFCs by providing additional documents and agreeing to higher interest rates. CARS24 also offers the used car loan with an emi option for pre-owned cars.

NBFCs look after their customers and offer excellent customer service. Applicants can oversee all loan-related information and enable notification to avoid missing an installment deadline. 

NBFC loan eligibility criteria:

  • The minimum age of the borrower should be 22 years at the time of applying. 
  • The maximum age limit at the time of loan maturity must be less than 58 years.
  • The borrower must be an Indian resident. 
  • Salaried workers employed with a government organization or private firm can apply. 
  • The applicant must possess a year of work experience 
  • The minimum income of the borrowers should be more than 20,000, depending on the lender. 

Dealership Financing 

The majority of second-hand car dealerships in Delhi offer financing options for pre-loved cars. These dealerships have financial agreements with NBFCs and banks to facilitate loans at competitive interest rates. Dealership financing is a convenient option as you will get the loan at the dealership without seeking assistance from other lenders. 

Auto dealers market these loans to customers with poor credit scores who may not otherwise secure the loan. The interest rates of such loans are comparatively higher. Plus, if the EMIs are missed for more than 3 months, the vehicle will be seized. 

Once you have selected the car,  the dealership will then send your documents to third-party financial institutions and banks to check your loan eligibility. If everything goes well, they will come up with an installment amount, if you accept the terms, your loan will be sanctioned. 

Personal Loans 

If you don’t want to follow the traditional car loan route, no worries, even availing of a personal loan can help you acquire the car of your dreams. Personal loans are unsecured liens whereas car loans are secured loans. However, a personal loan gives flexibility, as you can use the amount to do anything, including buying a pre-loved car. 

To avail of a personal loan, you have to apply to a financial institution or lender. The lender then assesses the application and decides whether to grant or dismiss the loan application. If approved, then they will put forth the loan term, which you can accept or reject. If you agree to their terms, the last step will be finalizing the loan approval process.  

When everything is done, the lender will transfer the money to the given account. Post disbursement, the only responsibility left will be timely repayment of the loan as per the loan agreement.

P.S.- Defaulting a personal loan can land you in legal trouble and will also hamper your credit score. 

Also read: Benefits of Paying Off Your Car Loan Faster

Things to Ponder 

Before applying for a pre-loved car loan, there are plenty of factors to consider to make sure you make informed decisions based on your financial situation.

Credit score

Checking your credit score is vital before a loan application. Credit score determines the loan amount as well as internet rates. Keeping a higher credit score will increase your chances of being approved and getting a loan with low interest rates. 

Loan Amount and Down-payment option

Settle the amount that you will need to finance your car. Providing a substantial down payment will help reduce both the loan amount and monthly EMI bills. A down payment shows your financial stability to the lender.  

Loan Tenure and Interest Rates

Compare interest rates of different financial institutions and go for the one that offers the most favorable lending terms. Also, look for lower loan tenure. A shorter loan term may increase the monthly EMIs but will lower the internet costs. A longer loan tenure may lead to lesser EMI but higher interest rates. 

Additional Costs

Always be aware of any hidden fees related to the loan. Read all the loan-related terms and conditions carefully and understand the conditions before signing the documents. 

In a Nutshell 

Financing a pre-loved car in Delhi is a viable choice for those who dream of owning their own set of wheels. Buyers can choose a finance option as per their financial condition.

However, it’s crucial to consider factors like credit score, hidden charges, loan tenure and interest costs. After comparing different lenders thoroughly, you can come up with the best finance option to make your dream a reality.  

For a safer choice, you can always check used cars on CARS24, they offer unlimited verified options that too at your fingertips.

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