Owning a car  gives one the freedom  to go anywhere, reduce high taxi fares, and avoid long queues at the bus depot or train station.  Today, one  might typically consider investing  in a used car primarily because it cuts down the cost of traveling by almost half, and sometimes more.  Individuals who do not want to pay a down payment  will have to  keep a few things in mind before driving home their dream car.

The average cost of a second-hand car
Before discussing the details of a zero down payment for a second-hand car loan, one should understand the average cost of a second-hand car. The cost of a used car will depend on multiple factors, such as the brand, model, year of manufacturing, and the miles driven. Other factors influencing the cost are whether it’s been in an accident. So, one could find a second-hand car for as low as INR 30,000 (or lower) or much more than INR 10 Lakh. The lender will then split that amount into monthly payments for a particular tenure. For instance, if one takes out a car loan of about INR 5 Lakh, at an interest rate of 10%, they could expect to pay around INR 10,624 for 60 months. Several online calculators on various third-party websites could help one calculate car loan repayment estimates. One should always check every aspect of a pre-owned vehicle before  making a purchase .

Understanding zero down payment
A zero down payment loan is where borrowers do not need to make any advance payments for a new or second-hand car. The bank or lending institution offers to fund the car’s entire value, sometimes called “100% Finance.” The loan  is suitable for  those who wish to buy a pre-owned car but need more funds to make the down payments. The disbursed amount is divided into monthly payments for a qualifying tenure that could range from a few months to more than five years.

Features of zero down payment car loan
Individuals who opt for a zero-down payment loan on a second-hand car should know that each bank and other lending institutions might have varied features. However, there are a few common things one should keep in mind.

The first notable benefit is that one does not have to make a down payment, as the bank should fund the complete cost of the car. However, an additional payment for car accessories will be required, as 100% car financing does not cover these.
One will require a good credit score to avail of a zero-down payment car loan.
A borrower might need to pay the required processing fee to the bank while taking the zero down payment loan for the used car.
The loan amount should typically  not exceed  one’s net yearly income.

Eligibility criteria
To be eligible for financing for a used car loan with a zero down payment, one must meet certain criteria, which might differ from one lender to the next.

The applicant’s minimum age must be 25 or above. However, the minimum age could be 18 in some cases, with the maximum limit at 80.
The borrower could be a salaried person or a self-employed individual with a minimum work experience of about three years.
If  one is  a salaried individual,  one  will need to have a minimum yearly income of at least INR 2.50 Lakh or as indicated by the lender.
The individual’s present loan EMIs and the potential car loan should be less than half of the applicant’s salary.
One must have a good CIBIL score, usually above 750, and have no negative loan repayment history in the credit report.
The higher the car’s value, the lower the chances of getting 100% finance.
If the individual is an existing customer with the bank and has a good track record, one will have a better chance of securing the zero down payment loan on the second-hand car.

Documentation
The documents one must submit might vary from one lender to the next. That said, there are a few general documents that one might need to produce for all types of loans, including zero-down-payment loans for a used car.

For proof of income, a salaried individual might need to submit form 16 from the previous two years, the last three months of their payslips, and the last six months’ salary statement of the receptive bank account.
Self-employed professionals may need to submit the last two years’ ITR, a current account statement for the previous six months, a Service Tax certificate, a Sales Tax certificate, and a VAT certificate.
Applicants could submit their PAN card.
Other documents for proof of address or identity could include a homeownership deed, PAN card, Aadhar card, Passport, and recent passport-sized photographs.
The borrower will also need to submit the previous loan or vehicle ownership documents, such as the RC of the old car and loan agreement.

Other options that do not require down payments
As an alternative to zero down payment loans on a second-hand car, one could look for other ways to get the vehicle without paying an advance.

Maximizing  the car’s trade-in value to cover the cost of any down payment.
Applying for a personal loan ,  which  lets one use the money for all purposes, including buying a second-hand car.  However, such loans usually come with higher interest rates.