Having a car is no longer considered to be a luxury anymore. Nowadays, a car has become a necessity for people to travel easily in the comfort of their own private space. In addition, ownership of a four-wheeler, no matter how big or small, is considered a status symbol and a necessity in Indian households, especially if you are a family having more than three or four people. However, since the economy is experiencing a recession due to the pandemic, even monthly expenses would have eaten into your savings, reducing any chances of buying a new car soon. If you are in a situation like this, you should apply for the best 2nd hand car loan to purchase the best quality second-hand car.
Considerations before buying a used car
Many banks and NBFCs offer old car loans similar to the best personal loans, specifically for purchasing second-hand cars. You must consider several things before taking out a 2nd hand car loan if you are planning to buy a good-quality second-hand car.
There is no doubt that you can quickly become carried away by the tempting concept of owning big cars at a reduced price, but you must set a budget before looking for cars that will meet your needs. When you take out a loan to purchase a second-hand car, you should be able to balance your monthly expenses, your children’s school fees, and other EMIs. A used car loan can also be applied for through a mobile application. For example, if you use a personal loan app on your mobile phone, you will see a section that offers a used car loan option.
Sanctioned loan amount
For the loan amount to be approved, the lending company must inspect the condition of the used vehicle the applicant intends to buy. Lenders use various arbitrary parameters that vary from one another. You have to pay the rest of the car value out of your pocket if you do not receive a loan for the whole car value.
Process of documentation
Getting a 2nd hand car loan is usually a complex process because lenders like to hold off from approving loans until the registration is transferred to the applicant. An old car loan could be disapproved if the dealer you are purchasing the car does not provide reliable documents like a registration certificate under their name or a valid insurance policy.
Loan tenure and interest rate
It is estimated that old car loan interest rates range from 14% to 20%, depending on the lender and the product. Compared to new car loans, which generally range between 8-10%, used car loans are usually on the higher side of the range. The interest rates have increased primarily due to the depreciation in the value of pre-owned cars. As for the loan, tenure is pretty rigid and is only allowed to repay the loan for a maximum of five years.
Alternatives to used car financing
It is also possible to avoid the hurdles of seeking a loan to buy a second-hand car by taking out a personal loan and using it to buy the pre-owned car. In the case of best personal loans, the loan tenure is longer, and there are fewer restrictions on the user end. In other words, you can take out the entire car price and pay it on your own without spending money out of your pocket. A catch is that as it is an unsecured loan, a person’s credit score is scrutinized before they can get the loan.