As evaluated by SIAM (Society of Indian Automobile Manufacturers), used car sales are anticipated to scale by 10% CAGR by FY2024. It is also likely to heighten at a robust compounded annual escalation of 11% and hit the bar of 8.3 billion units by FY2026 in terms of sales.
The driving growth of second-hand cars can be attributed to affordability. Moreover, the availability of a used car loan has made it feasible for individuals to go ahead with their decision to buy a second-hand car. However, before applying for the credit option, borrowers must know the intricacies of the credit option and the advantages that they will be able to reap.
5 benefits of a used car loan
A used car loan bestows borrowers with the following benefits:
- Improved budgeting: As borrowers repay the loan amount through EMIs, they understand how to manage their finances and plan their repayment schedules accordingly. Moreover, computing the EMI amount helps them efficiently manage their budget and other monetary liabilities.
- Boost CIBIL score: As borrowers can manage to repay the loan amount within the deadline, it will help enhance their credit scores. A decent credit score helps borrowers get better loan terms and assures lenders of their repayment potential. Thus they are charged a lower interest rate.
- Lower price: As the cost of a used car is comparatively lower than a new car, borrowers will require less credit to fund the purchase. As a result, the repayment burden will become easy, helping borrowers own a car without straining their finances. Less loan amount translates to a lower EMI burden, which borrowers can easily afford to bear.
- No collateral: While availing of a used car loan, borrowers are not required to pledge additional collateral as the vehicle acts as a security to the lender.
- Flexible loan terms: Most lenders offer an extended repayment tenor to borrowers, helping them repay the loan on time. Borrowers can choose a loan tenor that will ideally suit their repayment capacities.
If borrowers are looking for an alternative financing option to fund a second-hand car purchase, they can ideally opt for a personal loan. Availing this credit option will help them access substantial loan amounts at a competitive interest rate. Moreover, the credit option has no end-use restriction. Borrowers can use it to fund any monetary requirement.
Moreover, as this credit option does not require borrowers to pledge any collateral, they can enjoy instant disbursal of the loan amount. In this context, borrowers must know how the disbursal process for a personal loan works.
Besides knowing how to get a personal loan, borrowers must be well aware of the fees and charges lenders levy, helping them compute the cost of borrowing.
Borrowers will additionally get to enjoy the benefits of exclusive pre-approved offers extended by leading financial institutions. These offers are applicable to a wide range of financial products like personal loans, business loans, credit cards, etc. Intending borrowers can check the pre-approved offers by submitting their names and contact details.
However, before applying for this multipurpose credit option, there are certain things that borrowers must consider.
Things to consider while availing a personal loan
It is vital for borrowers to look into the following factors before applying for a personal loan:
- Compare lenders: The first and foremost thing that borrowers should do is compare different lenders and choose the one that offers the best loan terms and lower personal loan interest rate. The affordability of the borrowing hinges on the interest rate; hence borrowers should opt for a personal loan with a competitive interest rate.
- Check eligibility criteria and documents: Borrowers must adhere to the eligibility norms and keep their personal loan documents in order before applying for a personal loan. This will help them receive instant loan approval.
- Choose repayment tenor wisely: It is equally important for borrowers to find the right personal loan tenor, helping borrowers repay the loan amount and dodge the EMI burden.
- Ensure healthy credit score: Lenders scrutinise borrowers’ credit scores before approving the loan application. Hence, it is important for borrowers to maintain a decent credit score of 750 and above. Borrowers with a subpar score must know how to improve their personal credit scores.
- Select the right loan amount: Borrowers must choose the right amount before applying for a personal loan. It will then help them repay and dodge monetary burden.
On the whole, a used car loan helps borrowers materialise their dreams of owning a car and sail through the expense of purchasing it. Alternatively, borrowers can look for a personal loan and enjoy the lucrative benefits it offers.