Essential Documents for Used Car Loan Approval - Complete Checklist

A used car loan is a great option for car buyers on a tight budget, or even buyers looking to purchase a vehicle in monthly instalments. If you’re wondering what the required documents for a used car loan are, this article will outline everything you will need. You will also find the eligibility criteria for a used car loan and some of the fees and charges. 

With all these in place, you’ll be ready to apply for a used car loan and be one step closer to your ideal second hand car. If you want to make the process smoother, shop from thousands of certified pre-owned cars on CARS24 with the option for same-day used car loan approvals at attractive interest rates. 

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Documents Required for Pre Owned Car Loan

Before you can apply for a used car loan, there are a few steps you must take to verify your identity along with proof of income to the bank or financier. Finally, you will need the registration certificate and insurance documentation of the used car you plan to buy. These are all the second hand car loan documents you will need: 
 

• KYC documents: Aadhar, passport, voter’s ID, driving licence
• PAN Card
• Employee ID (if salaried)
• Salary slips of the previous two months (if salaried)
• Bank account statements for the previous three months
• ITR proof of previous two years, if self-employed
• Vehicle registration certificate
• Vehicle insurance documents
   

Eligibility Criteria for Used Car Loan

For most banks and NBFCs (Non-Banking Financial Companies), the eligibility criteria to qualify for a used car loan remains the same. There are some requirements that can vary depending on the financier. These include the minimum monthly salary required, the age of the car at the end of the tenure of the loan and the number of previous owners. Do your research on financiers and see what suits your situation best. You may also shop from thousands of certified used cars on CARS24 and get an approved used car loan in minutes. These are the general eligibility criteria to qualify for a used car loan: 
 

• Must be of Indian nationality 
• Must be aged 18-80 years
• Must have a CIBIL credit score of 700 or higher 
• For salaried: Must have at least one year of experience and a minimum monthly salary of ₹20,000
• For self-employed: Must provide ITR proof for the previous two years 
• The age of the car must not be more than 12-14 years at the end of the tenure 
   

Documents Required Based on Your Work Profile

The documents required to apply for a used car loan differ slightly based on your source of income: 
 

Salaried Loan Applicant

• Photo Identity Proof: A copy of your photo identity proof documents like voter ID/Aadhaar card/PAN card/passport/driving license along with passport-sized photographs
• Salary Slips: A copy of your salary slips for the last three months
• Address Proof: A copy of your address proof like ration card/electricity bill/passport 
• Vehicle Registration Certificate: A copy of your vehicle's registration certificate
   

Self-Employed Loan Applicant

• Photo Identity Proof: Your driving license/voter's ID/PAN card/passport/Aadhaar card along with passport-size photographs 
• Signature Proof: A copy of your signature along with signature proof
• Address Proof: A copy of your address proof documents like utility bills/bank statements/property registration documents/property tax receipts/voter's ID
• Income Proof: A copy of your Income Tax Returns (ITR), audited Balance Sheet, and profit and loss statements, along with bank statements for the last three months 
   

Self-Employed Partnership Applicant

• Photo Identity Proof: A copy of your voter ID/passport/driving license/Aadhaar card
• Income Proof: A copy of your three month bank statement is required along with audited balance sheet & profit and loss statement. The accelerated book build should also be 0.5 times the EMI.
• Business Proof: A copy of your company's registered partnership deed/certificate of incorporation for public and private limited companies, including memorandum and articles of association along with a copy of the commencement of business certificate.
   

Self-Employed Others

• Photo Identity Proof: A copy of your voter ID/passport/driving license/Aadhaar card along with a photograph.
• Address Proof: A copy of your utility bill/bank statements/property registration documents/property tax receipts/voter ID.
• Income Proof: A copy of your income tax return documents, audited balance sheet, profit and loss statement, and bank statements for the last 3 months.
• Certificate of Ownership: A copy of your registered partnership deed or certificate of incorporation of public and private limited companies, including memorandum and articles of association.
   

Fees and Charges for Used Car Loan

Most banks and financiers have similar processing fees and charges for used car loans but there can be subtle differences that will end up making a big difference over your loan tenure so do your research while shopping around. Some of the commonly used car loan fees and charges are: 
 

• Processing fees: Fixed rates such as ₹2,000-4,000 or percentage of the value of car such as 1-3%, whichever is higher (indicative)
• Default in payment: 3% per month on overdue amount plus taxes (indicative)
• Dishonour of cheque/payment instrument: ₹600 per instance (indicative) 
• Prepayment penalty: 3-7% plus taxes on prepayment amount depending on when the loan is being prepaid (indicative) 
• Cancellation charge: ₹6,500 (indicative)
• Documentation charges: ₹1,500 (indicative) 
• Charges for repossession of vehicle: ₹22,000 plus taxes (indicative)
   

Conclusion 

While the documents required for a used car loan are standard across banks and financiers, there can be vital differences in eligibility criteria and fees/charges. Remember to do your due diligence when researching used car loans to find the best deal. 

Disclaimer: CARS24 reserves the right to approve/disapprove the loan after the submission of documents.