Today, a car is a necessity and no longer a luxury. As public transportation is limited currently during the COVID-19 pandemic, a car is essential for traveling. If you do not want to spend on a new car, you may choose from several reliable pre-owned vehicles, which areavailable with aused carloan.
Features of a used car loan
- It is available for different types of cars, whichinclude sedans, hatchbacks, sports-utility vehicles (SUVs), and multi-utility vehicles (MUVs)
- It offers maximum flexibility with customized repayment options between one yearto five years
- It is available for salaried individuals, self-employed professionals, partnership firms, and private and public companies
- It comes at affordable used car loan interest rates
- You can avail of funds for vehicles that are up to ten years old
- You can get finance with minimal documentation; the entire procedure is quick and hassle-free
Most banks and non-banking financial companies (NBFCs) offer these types of loans. The possibility of your loan application being rejected is quite low. However, there are some reasons why the lender may deny your pre-owned car loan request. These include:
- Technical errors
You may find it surprising that technical mistakes are one of the commonest reasons behind the disapproval of a used car loan application. The lender may reject your request because you failed to:
- Provide all the necessarydetails and complete the required sections in the application form
- Proofread the completed form before submission
- Offer adequate information, such as employment, income, and identity proofs
- Debt-to-income (DTI) ratio
Lenders consider the DTI while approving your loan application. DTI is calculated as a percentage. The total monthly expenses are divided by the monthly earnings and multiplied by 100 to calculate the DTI. If you already have multiple liabilities, such as a home loan or a personal loan, the DTI may be high.This means that your balance income may be insufficient to service the additional installment. Check the ratio before applying for a car loan to avoid rejection.
- Credit score
One of the most important used car loan eligibility norms is your credit score. Credit rating agencies calculate it based on your history and timely payments of other loans.Generally,lenders reject your loan application if the credit score is low.
Lenders like Mahindra Finance offer economical used car loan rates and flexible terms and conditions. Visit their website, check their offerings, and apply for a loan today.