Road travel is still the preferred choice for commuting among Indians. Most people prefer their cars to travel as they offer convenience, less hassle, and faster, especially when out for work. However, if we consider figures, then as per the economic times’ report, only 22 people own a car among 1000 individuals in India. Niti Aayog Chief Executive Amitabh Kant stated this.
The reason behind the dilemma amongst Indians relating to car purchase is affordability. However, there is always a silver lining. Indians shift towards the second-hand car, especially when it’s their first car. While a car is still a luxury for most, a pertinent question arises: Is it possible to get a used car loan for unemployed people?
Let’s take a look at eligibility criteria before concluding.
Used Car Loan Eligibility
Following are the eligibility criteria for a second-hand car loan:
- Age: The age of the applicant should be between 21 years to 65 years of age
- Income: The applicant’s income should be at least rupees 20,000 per month in the case of the salaried individual. However, in the case of business individuals, the income should be at least Rs. 2 lakhs per annum.
- CIBIL Score: The applicant must have a good CIBIL score to increase the odds of getting the loan sanctioned. Lenders usually prefer a CIBIL score above 750.
- Experience: For employed individuals, the applicant shall have stable employment of at least one year, while the self-employed individual should have a sound business for three years.
While the above eligibility criteria are necessary, certain relaxation is provided for income criteria to increase the reach of used car loans among the borrowers.
As per the relaxed criteria, if an applicant does not satisfy the income criteria, they can still obtain the loan with a third-party guarantor. Hence, if you can provide a third-party guarantee to the lender, you can get your used car loan sanctioned even if you fail to meet the income criteria.
Costs Associated with Used Car Loans
If you are wondering what would be the charges associated with used car loans, then here’s a snapshot of charges to help give you an approximate idea:
- Interest Rates: Used car loans usually carry a higher interest rate than standard car loans, mainly due to the wear and tear of the vehicle. Used car loans interest rates start at just 15% per annum, making it affordable to avail the loan.
- Processing Fees: The fees associated with used car loans are usually between 1.5%-2% of the loan amount.
Used car loans have enabled many Indians to have their car. One of the prominent features of used car loans is the high LTV (Loan to Value). It usually is around 95%, and for select vehicles, LTV can go up to 100% as well. That means you can get your total used car cost financed from the lender without paying a single penny for select vehicles. If you are concerned about the EMI, you can use a used car loan EMI calculator to enter the loan amount, used car loan interest rate, and the tenure to get the exact amount of EMI. Used cars offer the benefit of reducing the cash outflow and are best suited for novice drivers who are new to the streets as it reduces the losses in case any accident occurs. Therefore, bring your first car to your home now!