With more people buying used cars from dealers and auctions, the number of used auto loans has soared up. There are numerous car finance options that offer cheap auto loans for the tight budget. Auto loan finance is a common term today, yet there are confusions regarding how to get the right loan and what are the expected terms and conditions of the lender. A strong knowledge of the various car finance options can help the customer pick the best used auto loans.
Who is eligible?
Obviously, auto loan finance companies offer used auto loans only to those who have some regular income that can pay back the loan within the stipulated time. In addition to the photograph or the contact details, the application form has to include the classification of borrower. The people with regular income may belong to any one of the following categories:
- Self employed borrower: such a borrower must supply certain bank statements, the proof of address for residence as well as office and of course, details regarding income for the previous few months audited or other.
- Salaried employee: this again includes proof of income, residence and office, bank statements for a certain number of months.
- Limited company: whether public or private, these limited companies must have existed for at least two years and verifications must be provided.
- Firm partnership: along with the address proofs, the income proof and the bank statements, the applicant must include the authority letter and deed for the partnership.
How to get good loans
It is easy to get cheap auto loans if the borrower has a good credit record in the past. Of course, there are car finance options available for those with bad credit as well. At times, the individual might be reliable but has earned bad credit due to some unforeseen monetary difficulty. For such people, a second chance can be offered through auto loan finance for bad credit. Used auto loans generally give the borrower good principal amount and low rates if the borrower can make a substantial down payment to assure the lender about his or her investment in the car purchase.
Also, the longer the term of loan, the lower is the monthly rate. Hence, this is a good option for cheap auto loans. If the borrower can pay back the loan faster due to sudden funds, then the rates can be lowered. Anything about 75% can be offered by lenders as principal. EMI is calculated based on principal and chosen time. For those with bankruptcy history, there are special finance schemes. The customer can also opt for refinancing on the car. There are student loans with lower rates. There are secured as well as unsecured loans depending on whether the party has submitted the car deed as security. Lower rates are offered for secured loans. Interest rates vary with average 15%. It is better to check out incentives, rebates and leases along with several quotes before you choose from used auto loans.