Most used car loans get approved within 3 working days once your documents are in, and pre-approved loans can be disbursed in a day. The timeline mostly depends on your paperwork, your lender and how much you want to borrow. If you’re buying from Spinny, our team helps with the documentation and RC transfer so your loan moves quickly. Here are quick answers to the questions buyers ask most.
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Q. How much time would be required for a used car loan application to be approved?
Once you submit all the required documents, the loan approval can be granted within 3 working days. Pre-approved loans get disbursed within a day whereas an used car loan application with a new bank or NBFC can take longer.
Q. How much loan amount can be approved for a used car?
Some lenders even offer 100% loan coverage for car value but most banks and NBFCs offer 80 to 90% coverage. This means that you would have to be prepared with 10 to 20% of the downpayment amount depending upon the loan amount sanctioned by the lender.
Q. Can the used car loan be disbursed before the RC transfer?
No, most lenders would require you to complete the RC transfer process before disbursing the loan amount. If the used car was previously purchased through a loan, the hypothecation formalities need to be completed before RC transfer. At Spinny, we offer complete assistance during documentation and RC transfer procedure to make it smooth and seamless for you.
Q. Are joint used car loan applications permitted by banks?
Yes, most lenders allow the spouse of the primary applicant to be the co-applicant while applying for a used car loan in India.
Q. What is the approved tenure for used car loans in India?
Most banks and NBFCs offer a loan tenure ranging from 12 to 60 months. However, depending upon the car’s age and loan amount, some lenders even allow you to extend it up to 7 years or 84 months.
Q. When is a used car loan approved?
A used car loan is approved when your documents are successfully verified and the lender is also satisfied with your income source and loan repayment capability. The credit score of the applicant also plays a crucial role in the loan approval.
Q. How is the loan interest rate decided for a used car loan in India?
The CIBIL score plays a key role in determining the used car loan interest rates. However, your employment type, annual and monthly income, loan tenure, Loan-To-Value (LTV) ratio, and debt-to-income ratio are also assessed to determine the final loan interest rate.
Q. How to get used car loan approval online via Spinny?
You can start by applying for a used car loan online through the Spinny portal. First, confirm your eligibility and then compare loan quotes offered by several lenders. Choose the loan offer that aligns with your interest rate, tenure, and other requirements and upload the required documents. If your credit score is above 750, the loan approval could arrive within 24 working hours.
Q. Which formalities should I complete after loan approval?
After the loan approval, the lender will ask you to sign the loan agreement and set the NACH or e-mandate for the EMI deductions. Once you complete these formalities, the approved loan amount will be disbursed directly to the car dealer or seller but before that you also need to pay the downpayment.
Q. Which car papers are required for used car loan approval?
Car papers or documents such as the Registration Certificate (RC), copy of valid car insurance, copy of Pollution Under Certificate (PUC), etc. may be required for the used car loan approval. Some lenders also require a used car valuation report provided by a credible car testing agency.
Q. Can I check the tentative value of a used car online?
Yes, you may evaluate the expected value of a used car online using digital tools such as the used car valuation tool offered by Spinny. You have to enter the car details such as the car’s age, model, make, and some other details to help the tool to predict the estimated value of a used car. However, the final value is only determined after the physical verification of the car.
Q. Which documents are needed for used car loan sanctioning?
The documents needed for used car loan sanctioning include identity and address proof of the applicant, income proof of the applicant, car-related documents such as RC, insurance, and PUC, and bank statements for the last 6 months.
Q. Which documents are accepted as income proof for used car loans?
Salaried individuals can provide their salary slips (for the last 3 months), ITRs, or any other income proof along with the recent 6 months bank statement as income proof. Businessmen or self-employed individuals may submit their ITR records, GST certificate, shop establishment certificate, client invoices, or any other income proof along with the bank statement.
Q. Can a used car loan be approved without a bank statement?
Yes, some lenders might approve your used car loan application without a bank statement. However, it depends on the alternative income proof you provide and your credit score should also be high enough for this to happen. Adding a co-applicant and paying a higher downpayment can also expedite the loan approval process.
Q. Why do banks ask for a higher down payment for used car loan approval?
If the condition of the car is not great, the bank cannot approve a high loan amount. In this case, they ask the borrower to pay a higher down payment so that they can approve the loan application without any issues. A higher down payment also shows the commitment of the borrower and helps the bank to protect the collateral in case the borrower defaults the loan.
Q. Why are used car loans offered at a higher interest rate?
Used car loans are generally offered at a higher rate of interest as compared to new cars because of the higher depreciation associated with an old car. The credit score, overall profile, and income source of the applicant also helps determine the exact loan interest rate.
Q. Why do individuals prefer taking used car loans?
Most individuals prefer taking used car loans because they can lower their downpayment and use their savings for fuel and other expenses associated with a second hand car. Some individuals also prefer taking a loan for purchasing a second-hand luxury car in India.
