Are you buying your first car? If so, it is better to get a used car than a new one. The reason is that you can buy your dream car at a lesser price. Imagine, you can go on two international trips and yet be able to buy a used car. Also, you get a used car loan to manage your finances without putting any burden on your monthly budget.
Used car loans have been gaining tremendous popularity among car owners. Most lenders offer up to 80% of the vehicle’s market price as a loan. The interest rates are low, and repayment tenures are flexible, making timely repayment easy and convenient.
Documents required before applying for second-hand car finance
When applying for second-hand car finance, you will need to submit certain documents to your lender, which are:
- Identification proof: Aadhaar Card, Driving License, PAN Card, or Passport
- Address proof: Aadhaar Card, Utility Bill, Driving License, Voters ID Card, or Ration Card.
- Age proof: Passport, Driving License, or Ration Card.
- Income Proof: Bank statement, Income Tax Returns, Salary slips, or Form 16.
- A passport-sized photo.
However, the said documents are not the only ones that you will need to arrange. The lender may also require the following documents before approving a used car loan application:
- Vehicle purchase invoice
It is a document that contains details such as the owner’s name, chassis number, engine number, etc. The invoice confirms the actual owner of the vehicle or whether it is sold for the first time.
- Registration Certificate (RC)
While making a second-hand car, it is crucial to get the Registration Certificate (RC). Make sure to transfer the RC to your name. You can visit the RTO’s office and submit the following documents:
- Original RC
- Form 29 and 30
- Vehicle insurance
- Pollution Under Control certificate (PUC)
- Identification and address proof
- Crime report on NCRB
- No objection Certificate (NOC)
If the vehicle was bought on loan, the RC cannot be transferred to your name unless you get a NOC from the bank, stating loan clearance. The seller must also get Form 28 to prove there are no liabilities on the owner.
- Purchase agreement
While buying a second-hand car, it is imperative to make a purchase agreement with its owner. The document must be notarized on stamp paper.
- Tax receipt
It is worth noting that road tax payment is mandatory for all vehicles. Therefore, while buying a second-hand car, you must collect copies of the road tax receipt.
- Motor insurance
Another mandatory document to get while buying a car is motor insurance. You can either transfer the existing insurance policy to your name or get a new owner. If you wish to transfer the current insurance policy to your name, make sure to process it beforehand. Having your motor insurance increases your eligibility for a used car loan.
- Pollution Under Control (PUC) certificate
Before getting a car, make sure to check if the owner has a PUC certificate. PUC certificate is mandatory for all vehicles. If you do not have it, you will incur a hefty fine on the road.
Before getting second-hand car finance, it is crucial to prepare and submit documents containing proof of your identification, address, age, and income. The additional documents mentioned above also increase your eligibility for a loan.