By Namit Jain The car is no longer a luxury. It has become an essential purchase that allows you to commute easily in the comfort of your private space. Car financing is one of the largest consumer finance categories in India. Especially, used car financing has emerged as one of the fastest growing segments. The segment made a strong comeback in 2022, registering a year-on-year growth of more than 60 per cent. It is estimated that the industry is likely to grow at an annualized rate of 20 per cent and will touch the $10 bn mark by 2027. According to a CRISIL report, around 4.2 million Indians are driving the used car demand in the country and sales of used cars shot up 115 per cent during the lockdown.
Not surprisingly, it has become easy to get a loan to buy a used car since fintech companies have entered the segment to drive innovative consumer experiences in partnership with banks and NBFCs. Fintech has made loan processing more streamlined and user-friendly. The customer today enjoys the luxury of choices; just like a home loan or a loan against jewellery, you can easily get a loan for a used car.
How fintech firms are helping consumers to buy used cars
Fintechs have focused on introducing digitalization, creating price comparison tools and platforms that offer transparency into lending options to potential borrowers. Intuitive journey with paperless and instant loan sanctions is now becoming a reality in car loans. You can get up to 100% financing for your car at attractive interest rates and longer repayment tenures. Further, you can get the loan amount disbursed seamlessly at the car dealership, with practically no waiting days.
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Dedicated digital platforms: Seeing the growing demand for new and used car finance, several OEMs & financiers have rolled out dedicated digital platforms to provide car financing solutions to customers. To get a better deal, do proper research before applying. While most lenders may offer you up to 80 per cent financing, several products offer 100 per cent on-road financing as well.
Credible platforms: A major reason for the growing popularity of fintech firms is that these platforms offer tailored products customized based on a user’s repayment capacity, repayment history and desired budgets. Do compare the offerings of these platforms in terms of speed of approval, minimum paperwork, competitive interest rates, flexible EMIs and transparency. These will guide you in choosing the fintech platform that is best suited to your needs.
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Painless process: The platforms are designed to make the entire loan journey super easy and convenient while ensuring a quick turnaround time. With Video-KYC, Account Aggregator, e-NACH and e-signing, it is now possible to avail of a car loan without having to step out of the comfort of your home. The entire process is transparent, requires minimum paperwork, and most significantly for you, the approval takes minutes instead of days. Once approved the loan is disbursed immediately.
Things to keep in mind to get a loan on a pre-owned car
Finally, know your budget and loan and interest terms to avoid nasty surprises down the road. Check all papers, namely insurance and registration certificate are in place. Once you end up taking a loan and delivery of the car, don’t forget to get the title transferred to your name and hypothecation added to your financier.
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Refinancing your existing car
In case you already own a car, the good news is that you don’t have to go anywhere else for your add-on loan needs for personal use. You may avail of a refinance loan on your existing car and use the money to meet your personal expenses. With very limited documentation, you can avail a loan of as much as 200% of your existing car value at attractive rates.
