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Used car loans: Keep these points in mind

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Used Car Loans: Keep these points in mind

Are you planning to purchase a pre-owned (used) car? If you are short of funds, you may consider taking out a Used or Pre-Owned Car Loan that can help you purchase the car you want without using your savings or waiting to arrange the required amount. The Used Car Loan process is straightforward at ICICI Bank with completely digital processing and approval available for eligible customers. However, there are a few key things you should keep in mind before applying for a loan. Read further to know more.

Keep these points in mind:

1. Understand the Used Car Loan process

Before you apply for a Used Car Loan, it is advisable to research and understand how the process works. A Used Car Loan is more or less similar to a new Car Loan but with a few key differences. For example, interest rates on the former may be higher than the latter and the terms and conditions of the loan may also vary. Take the time to look up various loans and compare options from different lenders to find the best deal.

2. Check your credit score

Your credit score is key in determining whether you’re eligible for a Used Car Loan and what interest rate you’ll get. Before applying for a loan, check your credit score and ensure it is in good shape (ideally over 750). A good score can help you qualify for better loan terms and lower interest rates.

3. Check your eligibility

Different lenders have different eligibility criteria for Used Car Loans. At ICICI Bank, the criteria vary for salaried and self-employed applicants. Self-employed applicants must be Indian residents between 23-60 years of age. They must be in business for at least four years, earning a minimum of Rs 1.75 lakh annually.

Salaried residents and Non-Resident Indians (NRIs) between 21-54 years of age can apply. However, they must have at least two years of experience earning a minimum of Rs 2 lakh annually.

4. Set your budget

Before shopping for a pre-owned car determine how much you can afford to spend on it. Look at your monthly income and assess expenses to figure out how much EMI you can pay for a Used Car Loan. You will also need to factor in the cost of insurance, fuel and maintenance along with any modifications that you’re thinking of getting done. Once you’ve determined your budget, stick to it to avoid taking on more debt than you can handle. Also, think about how long the car will last depending on your city. This will vary for petrol and diesel variants. This should not be a concern if you’re going for an electric vehicle.

5. Consider a co-signer

Suppose you have a low credit score or limited credit history, you may consider asking an immediate family member or trusted friend to co-sign your Used Car Loan application. A co-signer with a good credit score can help you qualify for a loan and may even help you get a lower interest rate.

6. Get pre-approved

Pre-approval on a Used Car Loan can help you shop easily. Select customers can get instant approval following the application. For a Pre-owned Car Loan with up to 100% of the offer amount from ICICI Bank, there’s no documentation required. With a pre-approval, you’ll know exactly how much you can borrow and your interest rate.

7. Choose a suitable repayment tenure

You may want to get behind the wheel as quickly as possible, but before that you should think about how much you will pay back each month on a Used Car Loan. You can do this easily using our Car Loan EMI eligibility calculator. Just enter the desired amount, repayment tenure and interest rate to get your EMI amount.

If you’re looking for a new or Pre-owned Car Loan with competitive interest rates, check out ICICI Bank Car Loans. If you’re eligible, you can get a loan up to 100% of the on-road price and conveniently pay it over a maximum period of 7 years.

Understanding Car Loan interest rates

These rates are expressed as Annual Percentage Rates (APR) and depend on several factors like income, debt, credit score, value of the desired vehicle, amount of the Car Loan, loan duration and RBI repo rate. While the kind of vehicle does not directly influence the interest rate on a Car Loan, it may be impacted by its price. Our Car Loan interest rates are amongst the lowest you’ll find.

The interest rate on User Car Loans depends on your age, segment and variant of the car and whether you’ve banked with us before.

Conclusion

A Used Car Loan can be a convenient way to finance the purchase of a pre-owned car. However, before applying for a loan, ensure you understand the Used Car Loan application process, check your credit score, eligibility, determine your budget and consider a co-signer. With these points in mind, you can make an informed decision and get the best possible loan terms for buying your car.

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