Planning to avail a Used Car Loan? Check Eligibility and Documentation Requirements First

Mar 02, 2017

Used car loans are slowly gaining traction, as more and more Indians are getting comfortable with the idea of owning used cars. Every year, lacs of used cars are coming in the secondary markets and getting sold to genuine buyers. And financial institutions don't want to be left behind when it comes to catering to the requirements of these buyers.

But like all other loans, even used car loans have there own set of eligibility criterias and documentation requirements:

The amount available as loan is upto 90% of the valuation of the vehicles. The remaining 10% (or more in many cases) is to be brought in by the borrower as downpayment. Loans are offered for a maximum period of 5 years and generally cost 3 to 4% more than new-car loans. But this is negotiable and depends on a lot of other factors too.

Though lenders have the cars as collateral, fact is that they also don't want borrowers to default. So to ensure that the money lent is safe, keep minimum income related eligibility criterias are set. A salaried individual needs to have a minimum annual income of Rs 3 lac whereas self-employed professionals need atleast Rs 2 lac of annual income to be eligible for the loan.

Apart from fulfilling the eligibility criterias, borrowers also need to submit certain documents in support of their loan applications. These are:

  • Identity Proof: PAN Card, driving license, passport or any other government issued identity document
  • Age Proof: Proof of borrower being more than 21 years old - school leaving certificate, ration card, driving license, passport, etc.
  • Address Proof: Any of the above mentioned documents having current address can be submitted as address proof
  • Income Proof: For salaried individuals, ITR/Salary Slips/Form-16 can be submitted. For self-employed individuals, ITRs or balance sheets/P&L accounts can be submitted
  • Signature Verification Proof
  • Photographs

Unlike other financial products, loans have an inherent risk for the lender. So they are careful about whom the money is being lent to. Therefore, its in your best interest to have good understanding of all eligibility criterias and documentation requirements, if you want to assure lender about your credit worthiness and get your loan application processed quickly.