Buyer behavior has changed when it comes to cars due to the pandemic. People are not interested in saving money but want to spend it all today. The pre-owned car market is witnessing a surge in demand. The average car loan value has increased from Rs 3.5 lacs to Rs. 4.5 lacs from pre to post-pandemic.
You can buy a good second-hand car through a used car loan. You can get a used car loan at attractive interest rates, and the repayment tenure can stretch to seven years. You will also find some lenders providing 100% loan of the car’s value. Most NBFCs and banks provide used car loans.
There has been a rise in car loan demand since the pandemic. The need for a used car loan has increased from the pre-pandemic levels. The requirement for personal transportation has been growing since the pandemic hit.
Benefits & Features of A Used Car Loan
With a rise in car loan sector, here are a few benefits and features of a used car loan:
- Your monthly EMIs might be lower as a used car loan amount would be lower compared to a loan for a new car.
- The repayment tenure is long.
- Paperwork submission is minimal.
- NBFCs and certain banks are flexible in payments
- The depreciation rates and insurance costs are lower compared to new cars
- Certain NBFCs and banks offer up to 100% car refinancing
- The loan process is simple
Things to Remember
There has been an increase in the used car loan space due to the pandemic. People opt for personal transportation because they fear catching Covid from others. Buying a new car can be expensive, and that’s where a used car comes in. You can get a used car for much less than a new one. Here are a few things you should remember when you look to buy a used car:
Properly Check the Car
Ensure to thoroughly check the car and take a mechanic’s help if necessary. You can negotiate the car’s price if there is any issue with the used car. Check for vibrations by driving in a secluded area.
Thoroughly Check the Papers
Check the registration certificate and insurance papers thoroughly. Ensure that the chassis and engine number match the number on the documents.
History of the Vehicle
Check the vehicle’s history before purchasing it. You can find many details online. You can see if the vehicle was involved in an accident or service issues.
Transfer the Registration Certificate
Ensure you transfer the RC to your name once you purchase the car. A NOC will be required if the car is registered in another state. A NOC is also required if the previous owner purchased the car on loan.
It would be best if you immediately transferred the car insurance policy to your name. The policy will be considered void if it is in the previous owner’s name. In this case, it will not matter if the RC is in your name.
Get your car serviced before you start using it. Fix rusts, if any, and change the fluids before cleaning the car up thoroughly.
How to Apply for a Used Car Loan
- Visit the NBFC office or bank branch where you want to avail of the loan
- Fill out the application form
- Check your eligibility and submit the necessary documents
- Discuss the processing fee, interest rates, etc. to process the loan
Q1. Should you make a down payment in case of a used car loan?
A1. You might have to make a down payment to certain lenders when you avail of a used car loan. It depends on an individual lender and their terms and conditions.
Q2. Do you have to provide collateral or security when you avail of a used car loan?
A2. No, you don’t, as the car acts as the security. You need not provide collateral or any other security.
Q3. Can you avail of a used car loan with a co-applicant?
A3. Yes, you can.
Q4. Can you get a used car loan with a low credit score?
A4. If your credit score is low, your application might be rejected. In other cases, you might have to pay higher interest rates.