Used Car Loan Process with Interest Rates in March 2020 in India. ICICI, HDFC, SBI, Tata Capital Loan Financing Documents from Bank Sanction to Disbursement
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
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)
Additional Processing Fees: 1% to 2% of Loan Amount by Select Banks
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 along with Security PDC as Repayment Mode
» 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.
To be noted that Car Loan is a Secured Loan, its essential to provide RC with due HP (hypothecation) to Bank.