More than luxury, owning a personal car is a necessity nowadays. Where purchasing a new car is a significant monetary investment, second-hand cars are more tangible for the middle class. NBFCs or non-banking financial companies understand these needs and offer you greater flexibility and choices for a second-hand car loan. In this blog, you will learn the benefits of using used car loans from NBFCs. So keep on reading.
Advantages of Taking a Used Car Loan from NBFCs
Getting a second-hand car loan from a non-banking financial company has immense benefits. Where the banks are more stringent for used cars, NBFCs can offer you the conveniences, including;
Instant Loan Processing
One of the significant advantages of taking a second-hand car loan from NBFCs is the quick loan processing. In contrast to traditional banks, which take days to sanction a loan application, NBFCs have a reputation for providing a fast turnaround. Some NBFCs have online portals through which loan applications are processed in hours. With low paperwork and streamlined processes, NBFCs keep the borrower from waiting a long time to get approved, allowing you to take your new car home quickly.
Flexibility in Eligibility
NBFCs have flexible eligibility norms that can prove highly beneficial for individuals with irregular sources of income or imperfect credit scores. Unlike banks whose eligibility standards are strict, NBFCs make their eligibility rather relaxed. Instead of relying entirely on credit scores, they test the applicant's repayment capacity. This convenience allows a significant portion of the population to benefit from a second-hand car loan.
Custom Loan Solutions
NBFCs realise that every customer's financial condition is different. Hence, they provide custom loan solutions according to individual needs. Whether you need a smaller loan amount or a longer repayment tenure, NBFCs will probably adjust the loan terms according to your specific needs. This flexibility helps borrowers find a loan package that fits their needs.
Higher LTV Ratio
The loan-to-value (LTV) ratio is one of the most important factors when taking a car loan. LTV ratio is the ratio of the loan you can obtain to the value of the vehicle. NBFCs provide a higher used car loan interest rate with a good LTV ratio than conventional banks. This becomes extremely helpful when purchasing a second-hand car by reducing upfront payment and making it available as a better-quality vehicle.
Minimal Documentation
Banks may insist on many documents, such as detailed credit reports, income tax returns, and other financial records. NBFCs, however, usually request only necessary documents such as proof of identity, address, income proof, and information about the vehicle being financed. This streamlined paperwork procedure saves time and facilitates easier loan approval for applicants.
Competitive Interest Rates
NBFCs tend to provide a competitive used car loan interest rate. Because they have less operational expense than a normal bank, they can provide loans with lower interest and benefit the borrower in cost savings. With the right financier, you can get a loan with good terms and a reasonable interest rate, which will decrease your financial burden over some time.
Availability of Pre-owned Car Loans
Not all banks and financial institutions provide loans for used cars. However, NBFCs have identified the increasing demand for second-hand vehicles and have come up with loan products exclusively for them. These loans are offered on different makes and models, and with flexible repayment terms, you can buy a second-hand car that suits your budget and lifestyle.
Wide Availability of Vehicles
When you decide to buy a used car, you are offered many cars with different models, brands, and prices. NBFCs usually provide car loan facilities for ages, ranging from relatively newer to old cars. This allows borrowers to choose the vehicle best suited for their needs without confining themselves to a specific age bracket.
Crucial Tips on Getting Favourable Terms on Used Car Loans
Getting the help of NBFCs is way more beneficial than relying on banks. However, by following the below tips, you can get greater favour in your used car loans from NBFCs;
- Research Interest Rates: Compare the interest rates on the second-hand vehicle loans different NBFCs offer and select the best.
- Check Processing Charges: Ensure that processing checks are fair and clear.
- Have a Good Credit Score: Although NBFCs are free to offer loans, possessing a good credit score will ensure you receive a loan at lower interest rates.
- Choose the Correct Tenure of the Loan: Choose a loan tenure suitable to your income level and repayment ability.
- Verify Your Loan Amount: Avail only what you need, and do not ever take a higher amount than your requirements, as that may turn into a higher EMI.
Conclusion
Right from faster processing to lower used car loan interest rate, NBFCs offer numerous advantages to those interested in purchasing a second-hand car. But carefully evaluate the offerings of different NBFCs, their interest rates, tenure, and a wider availability of used-car loans to make your deal the best for your interests.
