Points to Consider Before Taking a Used Car Loan

Gone are the days when a car was just a symbol of luxury, today it’s a necessity. When public transport proves to be too crowded or its irregularity becomes a matter of irritation and hailing cabs burns a hole in your pocket, having your own car appears to be a great solution.

However, not all of us might have the money to buy a new car. Despite the drop in cost, a car’s price can still run into few lakhs. This is where one should think of buying a used car and to make things easier, get a ‘used car loan’ available at financial institutes and non-banking finance companies (NBFCs). In fact, the trend is catching up fast.

In India, the used car market is estimated to reach over $ 66 billion by 2022 courtesy of growing population, rapid urbanization, and increasing inclination of customers towards used cars because of the affordability quotient. Online buy-and-sell platforms have brought dealers and buyers much closer in the last one decade. But don’t jump the gun; buying a used car can be tricky business. One has to make sure he/she is not landing in a bad deal. Apart from a thorough research, here are few things to consider while buying a used car:
 

Things to consider while buying a Used Car

1. Budget: Price of a used car is much lesser than the on-road price of a new car but do decide on what can you easily afford – a hatchback, sedan or an SUV? Remember that in case of loans, the valuation of the car done by the lender will be lower than what you are shelling out to buy. Please note that most financial institutions provide loans up to 80% value (as measured by the bank) of the used car, with the loan tenure being 1-5 years. The interest rate also depends on many factors like, how old the car is, and the category of the car. Also, set aside some amount for miscellaneous charges like processing and transfer fees in addition to the down payment.

2. Select Vehicle: Select the vehicle on the basis of your needs. Judge the used car on parameters of fuel economy, performance, safety, styling and brand. Also, popular models of car with age less than four-five years and negligible requirement of additional maintenance, fetch better loan deal from banks as compared to rare/ offbeat models. Always test drive the car.

3. Service History: Make sure the vehicle you’re planning to buy has undergone regular servicing, this will ensure the car is well maintained.

4. Paper Work: Take the necessary documents related to insurance, warranties and registration from the dealer. Don’t sign papers in the excitement of getting the car without thoroughly reading them. Once the amount is paid, dealer may not entertain your complaints.