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Everything To Know About Pre-Owned Car Finance

If you want to bring your ideal car home, you may always buy a used car. Many banks and commercial institutions also provide pre-owned car finance. You may apply for a used auto loan online from the convenience of your own home. Remember to examine the lender’s second-hand vehicle loan qualifying criteria to reduce the possibility of your second-hand auto loan application being rejected. Read further to know more about preowned car finance.

Eligibility for pre-owned car finance.

The eligibility criteria for pre-owned car finance for salaried and self-employed individuals are as follows:

Eligibility criteria for salaried individuals

  • The individual must be an Indian resident.
  • They should be at least 21 years old when applying for car finance.
  • The maximum age of the individual must be 60 years at the time of maturity of the loan.
  • Income requirement as per the finance amount and terms of the bank.

Self-employed

  • The applicant must be an Indian resident.
  • The maximum age at the time of maturity must be 65 years.
  • The business should be in existence for at least three years.

Eligibility criteria may differ from one lender to another. It depends on the terms and conditions of the bank or lender you choose.

Documents required

The documents required for a second-hand car loan are as follows:

Photo identity: PAN card, Driving licence, Aadhar card, or passport.

Address proof: Electricity bill, passport, or rent agreement.

Proof of age: Birth certificate, school/college leaving certificate, passport, driving licence, or PAN card.

Salary or income proof: Salary slips, certificates, latest form 16, or bank statements reflecting salary credits.

Always prepare the loan application documents beforehand to avoid any last-minute hassles. Contact your lender to learn about the documents you may require.

Can you avail of tax exemption for pre-owned car finance?

As a car is considered a luxury item in India, any tax deductions on the auto loan are not available if the vehicle is purchased for personal use. In other words, salaried individuals cannot deduct loan interest payments, and there is no tax benefit for pre-owned car finance for salaried personnel.

On the other hand, if you are a self-employed individual or business owner, you can obtain a second car loan for business reasons and deduct the interest payment as a business expense. Furthermore, you can benefit from auto loan tax breaks on depreciation and save a lot of money.

Difference between TDS and income tax

It is critical to understand various taxes and TDS. But what’s the difference between TDS and income tax? Income tax is calculated using an individual’s or company’s annual income. Tax is, however, deducted from the source over the fiscal year in which income tax is due.

What is TDS?

TDS stands for tax deducted at source. TDS assists in the collection of tax at the point of revenue generation. Banks and financial organisations deduct TDS on interest collected regularly. This enables the government to collect taxes in a timely and effective manner and reduce tax evasion. TDS is levied on various revenues, including interest, commissions, dividends, and salaries.

What is income tax?

Income tax is a mandatory contribution placed on an individual’s wages based on their income. For the money deducted from your gross income, there are typical tax slab rates. In other terms, it refers to an individual’s total tax liability, and his annual taxable income after deductions and exemptions, as computed after a fiscal year.

Companies, estates, trusts, and various other entities pay income taxes on their earnings or revenue. If you are considering acquiring a second-hand car in the near future but need the necessary funds, pre-owned car finance may assist. You don’t have to spend your cash reserve and savings on a purchase because you may buy your favourite bike and repay the loan in equal monthly instalments. You can also avail of tax benefits and exemptions on the interest paid for a second-hand car loan if you are a self-employed individual.

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