How do used car loans work?

Used car loans allow you to purchase a pre-owned vehicle without having to pay the entire cost upfront, making it affordable to own your own vehicle. The first step in getting a used car loan is to identify the used car you wish to purchase and then the lender (your bank, non-banking finance company (NBFC) or the dealership's finance company). Getting a used car loan is a very straightforward process. You can choose to apply online or in person depending on your preferences.

You complete an application form, inputting your personal and financial details as well as the details of the used car you wish to purchase. The lender will check your details to see if you are eligible; this usually involves checking your personal details e.g age, income, state of credit etc, and in some situations, your employment or business security/stability. The lender will check the used car as well. They will assess the vehicle and provide a valuation, ensuring that the used vehicle is in good condition and furthermore, that the loan amount is justified.

Once your application has been approved, the lender will pay the seller directly, or they will transfer the loan amount into your bank account. You then repay the loan provider in fixed monthly payments over a minimum of 1 year, up to a maximum of 7 years, as agreed with the lender.
Most lenders currently allow you to monitor your loan via their online portal, so you can view your loan and payment history whenever you like.

Used car loan is simple to apply for and allow you to get into the driving seat of your car without paying the whole balance upfront. Ideally suited to your very own vehicle, without too much financial burden.