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Banks offering less than 7% interest rate for buying pre-owned cars – Check best offers

Often people feel that they can only get a loan to buy a new car, but that is not true. Almost all banks offer loans to buy a second-hand car if you meet the eligibility criteria.

Salaried and self-employed can apply for pre-owned car loans, but the eligibility criteria may differ.

Are you falling short of money to buy a used car? Don’t worry. You can quickly get a pre-owned or used car loan from both public and private banks. Often people feel that they can only get a loan to buy a new car, but that is not true. Almost all banks offer loans to buy a second-hand car if you meet the eligibility criteria.

Salaried and self-employed can apply for pre-owned car loans, but the eligibility criteria may differ. Car valuation and your credit score, along with your income, are taken into consideration before banks accept your loan application.

Pre-owned car loans are instantly disbursed hassle-free if you meet the eligibility criteria to apply for the loan. Most banks offer up to 95% of the loan on the car’s total value. However, some banks can even disburse 100% of the value of your vehicle if your credit score, income, and car conditions match the bank’s eligibility criteria. However, some banks may refuse to disburse loans for cars older than three years. So, you need to check this with the lender before applying.

Two things are crucial when you apply for a used car loan. One is the applicant’s eligibility criteria, and the second is the documents of the car you are planning to buy. If these two things are in place, you can instantly get the loan. You can apply either online or visit the nearest bank.
It is good to be acquainted with all the terms and conditions and check the total interest you will be paying for a particular duration loan. You can compare the interest rates of different financial institutions to ensure you get the best deal. If your credit is 750 or more, you can try to negotiate with the bank to give you the best interest rates. You must also check the processing fee and other hidden charges before applying for the loan, according to Bankbazaar.

Also, remember that the interest rate for the use car loan is likely to be on the higher side than the interest rate for the loan for a new car. Also, the insurance cost is not covered in the loan amount. Ensure you have the relevant documents ready as delays in submitting the documents will lead to a longer time for the loan to be disbursed. It is advisable to choose an established lender so that the loan process is hassle-free and less time-consuming. You should take the help of a car mechanic whenever possible to avoid an issue later. It is good to check all papers related to the car registration and insurance to avoid any issue in getting the loan.

To apply for the pre-owned car loan, you will need the loan application form, car valuation report, identity proof, address proof and income documents. Some banks may require you to pay the down payment, so keep that money aside and check how much loan you need to purchase the used car. Calculate the EMI and the interest applying different tenures and choose the one that you are comfortable with. If your credit score is low or the car papers are not in order, the loan application might get rejected or the interest may be higher. Also, you need to check the charges if you foreclose your used car loan or prepay the same.

Also, remember that you do not need to provide any security or collateral to get the pre-owned car loan, as your car acts as the security. Below are the interest rates and EMIs for used car loans of Rs 7 lakh for 3-year tenure.

Interest Rates & EMI on Used Car Loan of Rs 7 Lakh for 3-Year Tenure

Compiled by BankBazaar.com

Note: Interest rate on Used Car Loan for all listed (BSE) Public & Pvt Banks considered for data compilation (Excluding small finance banks); Banks for which data is not available on their website are not considered. Data collected from respective bank’s website as on 08 Mar 2022. Banks are listed in ascending order on the basis of interest rate i.e. bank offering lowest interest rate on Used Car loan is placed at top and highest at the bottom. Lowest interest rate offered by the banks is shown in the table (irrespective of the loan amount or tenure). EMI is calculated on the basis of Interest rate mentioned in the table for Rs 7 Lac Loan with a tenure of 3 years (processing and other charges are assumed to be zero for EMI calculation); Interest mentioned in the table is indicative and it may vary depending on bank’s T&C. *Rack Interest rate

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