As the demand for personal vehicles rises in India, many people are turning to 2nd hand cars in Delhi NCR as it is a more affordable option. However, financing a used car can be challenging, especially if you don’t have the cash to pay for it upfront.
That’s where used car loans come in. If you’re considering to buy second-hand car in Delhi and need financing, it’s essential to understand the interest rates offered by lenders in 2023.
In this blog, we’ll explore the currently used car loan interest rates and provide tips on how to secure the best deal.
When customers make their monthly payments in 2023, the interest rate on used automobile loans from banks is computed on the outstanding loan amount. Borrowers can opt for either a fixed or floating interest rate. With a fixed rate, the interest rate remains constant throughout the loan tenure.
In contrast, with a floating interest rate, the EMI fluctuates based on changes in the bank’s lending rate, usually after the Reserve Bank of India’s (RBI) repo is reset every financial quarter. Other factors that affect interest rates include a borrower’s credit score, previous loan defaults, relationship with the bank, and car valuation.
The Interest Rates Offered By Major Banks For Used Car Loans:
|Bank||Interest Rate Range|
|Bank of Baroda||11.90% to 14.65%|
|Bank of Maharashtra||12.45% to 15.30%|
|Punjab National Bank||9.95% to 10.75%|
|State Bank of India||11.25% to 14.75% (Fixed)|
|Axis Bank||13.45% to 17%|
|HDFC Bank||13.75% onwards|
|ICICI Bank||11.25% to 18%|
|IDFC First Bank||13.49% onwards|
|Karur Vysya Bank||11% to 15.50%|
|South Indian Bank||11.65% to 17.60%|
|Tamilnad Mercantile Bank||11.85% onwards|
|Dhanlaxmi Bank||12% to 15.40%|
|Union Bank of India||12.90% to 13%|
|Jammu & Kashmir Bank||12.85% to 13.85%|
*based on date and month, this information may vary.
How To Calculate EMI On a Used Car Loan
To calculate the EMI (Equated Monthly Installment) on a used car loan, you can use the following formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal amount of the loan
R = Monthly interest rate
N = Loan tenure in months
To calculate the monthly interest rate, divide the annual interest rate by 12 (the number of months in a year). For example, if the annual interest rate is 9%, the monthly interest rate would be 0.75% (9%/12).
Let’s say you want to take a used car loan of Rs. 5 lakhs for a tenure of 5 years (60 months) at an annual interest rate of 9%.
Using the formula mentioned above, the calculation would be:
EMI = [500000 x 0.0075 x (1+0.0075)^60]/[(1+0.0075)^60-1]
EMI = Rs. 10,464
So, the EMI for a used car loan of Rs. 5 lakhs for a tenure of 5 years at an annual interest rate of 9% would be Rs. 10,464 per month.
Eligibility Criteria For Getting A Used Car Loan
The eligibility criteria for getting a used car loan in India can vary depending on the lender, but some common factors that are considered include:
- Age: Most lenders have a minimum age requirement of 18 years for the borrower, and a maximum age of 70 years at the time of loan maturity.
- Income: Lenders will evaluate the borrower’s income to determine their ability to repay the loan. Typically, the borrower should have a minimum monthly income of Rs. 20,000 to Rs. 25,000.
- Employment: Borrowers should have a stable employment history and be currently employed in a job or business.
- Credit Score: A good credit score indicates a borrower’s creditworthiness and ability to repay the loan on time. A credit score of 750 or above is usually considered ideal for getting a used car loan.
- Down Payment: Lenders may require the borrower to make a down payment of 10-20% of the car’s value to reduce the loan amount and risk.
It’s important to note that the eligibility criteria may vary among lenders, and borrowers should compare the terms and conditions of different lenders before applying for a used car loan.
Documents Required For Getting A Used Car Loan
To apply for a used car loan in India, the following documents are generally required:
- Identity Proof: Any government-issued identity card such as Aadhaar card, Passport, Voter ID, Driving license, PAN card, etc.
- Address Proof: Any government-issued address proof such as Aadhaar card, Passport, Voter ID, Driving license, utility bill, bank statement, etc.
- Income Proof: Salary slips, bank statements, income tax returns (ITR), or any other income proof that showcases the applicant’s income.
- Employment Proof: Employment certificate, offer letter, or any other document that proves the applicant’s employment status.
- Vehicle Documents: Used car documents such as registration certificate (RC), insurance policy, and other documents pertaining to the vehicle.
It is important to note that the specific documents required may vary depending on the lender and the loan amount. Borrowers should check with the lender to confirm the necessary documents before applying for a used car loan.
Get Your Own New Second-Hand Car With India Car Bazaar
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If you are interested to either buy and sell cars, you can visit our website and explore the available options.