The popularity of used cars has increased significantly over the past few years and has in fact exceeded the number of new cars being bought every year. Since the car is an ever depreciating asset many people find it financially sound to go for a used one rather than invest in a new one. In order to acquire a used car the banks are offering special used car loans that have been specifically designed to suit the purpose. These loans make it possible for people who prefer to buy a used or second hand car over a new car to actually get their hands on their object of desire. The used cars come at a hugely discounted price as compared to a new one of the same make or model.
Special Features of Used Car Loans
The loans available for used cars are somewhat different in their features as compared to the loans that are available for new cars in the market.
- The price of the car is taken as the on road price with a margin of Rs. 25000 for registration, insurance and accessories for a used car.
- The loan offered is typically about 60% of the on road price of the used car which may be increased to 85% in certain special cases.
- The maximum age of the car at the time of purchase through a used car loan should not exceed 3 years (5years in special cases).
- There will be processing fees of 0.5% percent applicable on the used car loan as in any conventional new car loan.
- The normal tenure for repayment of used car loans ranges from 3 to 5years and not extendable beyond that.
- The actual EMIs for used car loans may be lower than that for a new car loan in most cases.
- The rate of interest applicable will be as per the terms and conditions stipulated by the particular financier.
- The down payment in case of used car loan shall not be less than 15% in any case.
- There shall be no upfront installments required in case of used car loans as is the case of some types of car loans for new ones.
Essentials to be borne in Mind
There are some essential points that every used car customer needs to bear in mind while taking such a loan:
- The documentation pertaining to the used car demanded by private financiers for a used car loan is much lesser as compared to the public sector banks.
- There is a lot of scope of bargaining in the case of a used car loan in term of interest rate, down payment amount, repayment tenure and the processing fee.
- It is easier to waive off the prepayment penalty in case of a used car loan as compared to other car loans.
- The repayment tenure being shorter the EMIs in a used car loan tend to be higher which one has to be prepared for.
Taking a car loan to get oneself a used car is a idea that is getting popular among many middle class Indians who do not want to waste additional money just for the sake of owning something that is unused before.