Used car loans allow Non-Resident Indians (NRIs) to finance the purchase of used vehicles when visiting or relocating to India. These loans address the unique financial needs and challenges faced by NRIs when purchasing a vehicle in India. Used car loans offer NRIs flexibility in loan terms, access to financing without paying the full amount upfront, and the convenience of structured repayment options. However, eligibility criteria can be stringent, often requiring a resident Indian co-applicant and thorough documentation.
As more NRIs purchase cars, lending institutions are offering dedicated NRI used car loans with competitive rates and repayment schedules. To know the benefits of used car loans for NRIs read the article below and make wise decisions.
Benefits of Used Car Loans for NRIs
Some of the compelling advantages of used car loans for NRIs are as follows:
1. Quick and Streamlined Approval
Some of the banks and non-banking financial companies(NBFCs) offer a faster approval process on used car loans for NRIs within few working days under dedicated NRI services. From simpler eligibility criteria for NRI loans, easy documentation needs and income assessment to personalised assistance for applications, they facilitate quicker loan sanctioning. This aids NRIs in purchasing suitable used cars faster for their commuting needs.
2. Customised Loan Tenures
Car ownership for NRIs offers flexible repayment tenure options. This flexibility allows borrowers to choose a repayment period that suits their financial situation and plans in India. While longer tenures reduce monthly payments, shorter tenures help minimise overall interest costs. Ultimately, the choice of loan tenure depends on individual preferences and financial goals, making it important for NRIs to carefully consider their repayments.
3. Down Payment Flexibility
Used car loans cover between 70-85% of the total vehicle value, so NRIs need to pay only the remaining 15-30% of the car costs upfront. This significantly reduces the dependence on large NRE account balances and local savings, which may be limited for newly returned NRIs. These loans help make purchases easier for people who have other financial priorities, like buying a home or starting a business after moving.
Note: The percentage varies depending on the policies of the chosen lending institutions
4. Competitive Interest Rates
Banks and NBFCs offer exclusive interest rates on NRI loans, starting at 10% p.a. for used car financing, which is significantly lower than the average two-wheeler loan rates. Competitive pricing makes use of the good credit profiles of the growing NRI applicant segment, ensuring tailored financial solutions. With rising demand for used cars among returning NRIs, affordability is further enhanced through collaborations between local banks, NBFCs, and international financial institutions, resulting in attractive loan options.
5. Personalised NRI Services
End-to-end used car loan services for NRIs include dedicated relationship managers well-versed in their needs, application assistance in preferred languages, faster query resolution and easier processes. Specialised services result in developing familiarity and trust, which is essential for NRIs unfamiliar with local financing procedures. The personalised and faster assistance also smoothens and expedites the loan application procedures for NRIs during their stay.
6. Minimal Documentation Requirements
Used car loan providers have minimal documentation requirements for NRIs, which include primarily a passport, visa proof, overseas bank account statements and income tax returns. Many waive off the need for income proofs and other local documents, given NRIs' limited financial history in India. Overseas income statements are often adequate for loan eligibility and amount assessment.
This enables faster qualification and approval for newly arrived immigrants. Limited documentation needs provide convenience to visiting NRIs by reducing paperwork needs through online application options.
Conclusion
Used car loans can be a practical financing solution for NRIs, offering flexible tenures, structured repayment, and competitive interest rates. While certain lenders do provide dedicated NRI services, applicants should be prepared for detailed documentation and may need a resident Indian co-applicant. Comparing offers and understanding lender requirements can help NRIs make informed decisions when purchasing a used car in India. As more NRIs invest in used cars, loans create affordability and access to required financing in line with their duration of stay in the country.
