Buying a used car as a Non-Resident Indian (NRI) can be a challenging process, especially when managing finances from abroad. However, opting for a used car loan can simplify the purchase by providing financial support and flexible repayment options.
Banks, non-banking financial companies (NBFCs) and other financial institutions offer used car loans for NRIs looking to buy second-hand vehicles. These used car loans come with certain features and benefits tailored to the needs of NRIs that make purchasing cars more convenient and affordable.
In this article, we explore the top features and benefits of NRI used car loans, helping you understand how they can streamline your vehicle purchase experience. Let us get started!
Top NRI Used Car Loan Features
Here are some of the features of a used car loan for NRIs:
1. Flexible Loan Amount
Banks and financial institutions typically provide up to 85% financing for the total market value of the used car to NRIs. This covers a large portion of the car purchase price, significantly reducing the applicant's upfront down payment requirement. Applicants need to pay only 10-15% of the car cost from their savings or arrange for the margin amount separately. The balance of 85% of the car value can be easily financed through this loan.
Note: The approved loan amount is determined by the eligibility criteria and the lending institution's policies.
2. No Restrictions on Car Model
Applicants have the full freedom and option to purchase any model of used car, ranging from basic small hatchbacks and sedans to high-end luxury vehicles, premium SUVs and imported models. Lenders typically finance a wide range of car models but may set restrictions based on the car’s age (commonly not older than 5–7 years) and condition. Some lenders might have specific policies regarding luxury or imported vehicles.
3. Easy Transferability
These used car loans for NRIs can be seamlessly transferred from one bank branch to another across different cities and locations in India, as per the applicant's job location or place of residence. This hassle-free transferability is very useful for NRIs who relocate to different Indian cities frequently if their jobs demand mobility. The loan account moves to the new branch location without any changes in repayment schedule or applicable interest rate.
4. Option to Take Over Existing Loan
In certain cases, lenders may permit an NRI applicant to take over the outstanding loan on a used car, subject to eligibility checks and approval. The terms may be revised based on the new borrower’s profile. This simplifies the process and eliminates the need for a new loan application, making financing more straightforward.
5. Online Application Facility
The entire used car loan application process can be completed online through the financial institution’s website or portal. From KYC and income document submission to filling out the application form and uploading required documents, every step is digital. Applicants can track their application status in real time, resolve queries online, and receive loan approval without visiting a bank or NBFC branch in person.
6. Exclusive Pricing
As exclusive incentives targeting NRI customers, financial institutions often offer special discounted interest rates and processing fees on used car loans. Compared to regular used car loans, NRIs can save significantly on both recurring interest costs and one-time processing fees, thereby reducing overall loan outgo.
7. Prepayment Options and Charges
Many lending institutions offer NRIs the option to prepay their used car loans either partially or in full during the loan tenure. While some banks and NBFCs may levy nominal prepayment or foreclosure charges, especially if done within the initial years, others may waive these fees after a certain period. This flexibility allows borrowers to reduce their overall interest burden by repaying the loan early, subject to the terms and conditions specified by the lending institution. It is important for applicants to review the prepayment policy carefully before finalising the loan.
Top NRI Used Car Loan Benefits
Here are some of the compelling NRI car loan advantages:
1. Low Interest Rates for NRI Loans
The interest rates applicable on used car loans for NRIs start from 10% p.a., which is considerably lower on average compared to the higher interest rates of 11% onwards charged for new car loans. This difference of 1% to 5% in rates results in large interest savings annually.
Note: Kindly check the bank/lending institution’s website for the rate and charges.
2. Quick Processing & Approval
Loan processing times for NRI used car loans can be efficient if all required documents are submitted promptly. However, documentation requirements for NRIs are often more detailed than for resident applicants, and approval times may vary by lender. Since the car has already depreciated, the loan processing is quicker, and approval is typically granted within a few working days after submitting the required documents. This saves time and hassle for NRIs.
3. Higher Loan Coverage
Used car loans cover up to 85% of the total market value of the car. This higher loan amount coverage on used cars compared to new cars greatly reduces the down payment burden on applicants.
4. Lower Insurance Premiums
Since used cars are valued less than new ones, their insurance cost is also lower. This means you pay less each year for insurance, which helps save money on the ongoing expenses of owning a used car.
5. Lower Depreciation
Brand new cars begin to rapidly depreciate the moment they are purchased and register steep 20%- 30% depreciation in just the first year. Used cars have already undergone the initial high rates of depreciation phase, so financial losses due to further depreciation are significantly lower.
6. Wider Selection Options
Applicants have a wider selection of used car makes, models, variants, body types, colours, and price ranges, allowing them to choose based on personal preferences and budget. This offers far more options than the limited variants available in newly launched cars.
7. Freedom to Purchase from Any Dealer
One of the most significant benefits of used car loans is that they provide complete freedom to the applicant to purchase second-hand cars. This ranges from company-certified used cars from organised, large authorised dealers to private individual car sellers or even small roadside local dealers offering competitive prices. This gives applicants the power of flexibility and wider options to choose cars from any dealer as per their convenience and budget priorities.
8. Repayment terms for NRI car loans
One of the key benefits of NRI car loans includes flexible repayment options, allowing borrowers to choose a tenure that aligns with their financial plans. Loan durations vary, allowing NRIs to select shorter or longer repayment periods based on their ability to manage monthly EMI payments. This ensures that repayments remain convenient and structured without straining finances.
Conclusion
NRI used car loans make purchasing second-hand vehicles more affordable by covering a significant portion of the cost at lower interest rates. They provide flexibility and convenience through fast approvals, a wide selection of cars, and seamless loan transfers. With unique features and tailored benefits, these loans simplify the process for NRIs managing their financial needs abroad, ensuring a smooth and hassle-free car-buying experience.
