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Used Car Loans in India. Process, Interest Rates on Used Car Finance

Used Car Loans in India. Process, Interest Rates on Used Car Finance

Used Car Loan Process with Interest Rates in India. ICICI, HDFC, SBI, Tata Capital Loan Financing Documents from Bank Sanction to Disbursement


Used Car Finance

Used Cars Financing is not much different from New Car. However, unlike New Cars - where Sole Criteria Consideration is about Credit Eligibility of Individual - Used Car Financing Involves both Credit Eligibility and Asset Assessment i.e. Involves additionally Used Car Assessment by Financing Institution.

 

Important Consideration in Used Car Finance

» Age of Vehicle: Ageing of Vehicle (First Registration Date) plays an Important Role in Used Car Financing. Important is Bank Assessment of Vehicle for Valuation Price, Going to be Vehicle Age at time of Loan Maturity

» Loan Percentage: Unlike new cars wherein finance is provided upto 90% to 100 of ex-showroom price. Most of the Banks restrict loan amount in range of 70% - 80% of lower among (Valuation Price or Sale Transaction Price)

» Rates: Used Car Interest Rates is on Premium Charged to tune of 3% to 5% as against New Car. Indicative Range is 14% to 17% basis Car Model, Ageing

» Loan Tenure: Banks restrict Loan Tenure in Used Car - subject to Loan Maturity Date is not beyond 8 yrs from Date of Original Registration of Vehicle. For Instance - if Original Owner has bought the Car say in January 2010 - and selling it in January 2015 - then maximum time frame for which vehicle will be financed for Used Car Buyer will not be more than 3 yrs . The Clause is applicable by most of Leading Banks / NBFC

 

Used Car Loan Interest Rates

All Leading Banks - HDFC Bank, ICICI Bank, State Bank of India. NBFC like Kotak Mahindra Primus, Tata Capital and many more- all offer Used Car Loans. Interest Rate Varies based on 3 Criteria -

» Basis Car Model - (Hatch, Mid Sedan Petrol have lower rates as against Utility Vehicles or some Diesel Hatchbacks)

» Ageing - (Cars less than 3 year Old has lower financing interest rate as against 3 to 5 and higher than 5 yrs)

» Applicant Profile - (Salaried and that too with MNC or Professionals will get lowest rates as against Self Employed)

Interest Rates Indicative Range is from 12.5% to 17% (On reducing Balance). Processing Fees is 1% to 2% of Loan Amount. SBI at the time of writing Offering Used Car Loans at 12.65% Interest Rate

 

Used Car Loan Process

Used Car Loan Documents (For Loan Sanction)

KYC Documents : PAN Card and Address Proof. 1 Passport Size Photograph with Signed Loan Application Form

Financials.: Last 2 Year Form 16 + Latest 3 month Salary Slips / Latest 3 yr ITR with Computation. Add on Latest 6 Month Bank Statement for Salary A/c or Current Account (Basis Profile - Salaried or Self Employed)

Work Proof: Office ID Card for Salaried or Landline or Post Paid Bill Statement at Office Address for Self Employed

Vehicle Documents: Copy of RC of Car seeking Finance. If Loan on Car - not Necessarily but Foreclosure Statement is also asked for.

 

Credit Assessment for Approval of Loan

Once documents are submitted Bank will initiate

» Field Verification of Applicant 

» Depute for Assessment of Vehicle for Valuation by Bank Agency

The Bank basis Field Verification and Valuation Report along with Loan Documents do credit check and Sanction or Reject the Loan in 2 to 5 Working Days

 

Disbursement of Loan (For Loan Disbursement)

Applicant then Submits Documents like

» ECS / Debit Mandate / PDC (Post Dated Cheques) as per his wish for Repayment Cycle

» Along with it is Signed Agreement, Insurance Cover Note, Loan NOC (if loan closed) or Statement if Hypothecation on Car

» Balance Money Paid as Cheque Entry reflecting in Bank Statement

» Original RC to be submitted to Bank - who undertake work through agent to ensure that RC Transfer is done with proper loan hypothecation

Bank then make a Disbursement Cheque in favor of Seller or Part Payment in Old Financier Name and Seller. Cheque is usually handed over to Seller - only once the Transfer Forms and Documents are handed over to Bank empanelled agency - who does RC Transfer work in RTO and to ensure HP is duly added to RC.

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Important: If you seek advise or recommendation, pls raise query in Car Forum instead of posting in comments

 

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Sunday, 16 December 2018

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