The advent of organised companies like Cars24, CarDekho, CarTrade and Droom selling used cars online and financial institutions opening their doors to customers inclined to buy used cars with loans has lent a new boost to India’s pre-owned car market. Despite the demand for used cars being higher than the sales volume of new cars, many people had felt apprehensive of buying them in the past owing to lower penetration of the used cars loans market in India.
However, the market has changed a lot during the past few years. Used cars loan companies are offering loans to inclined customers at interest rates ranging between 9.5 per cent and 17 per cent. The loan amount can be used to fund the car’s total market price. Affordable used car loan interest rate
coupled with the flexibility of loan tenures up to as long as seven years are now redefining the car loan market.
While the second-hand car loan interest rate is in most cases higher than the loan rates on new cars, following specific essential tips can help you seek a higher loan-to-value ratio. These include:
Choose Your Car Wisely: Instead of going randomly to any dealer for a second-hand car, it is always preferable to opt for a dealer who has an online presence and allows you to choose from a wide range of used vehicles. This gives you more options to choose from based on the car model, mileage, distance travelled, colours, price, etc. If a car model has got wiped out of the market, the chances are that you would not be financed for the same. Age of the car matters as lenders decide the loan tenure according to how old your choice of car is. Online marketplaces for cars also help you to avail loans at unbeatable used cars loan interest rates, thus, promising you a great deal to go with.
Check Interest Rates: Scan loan aggregator sites for information about the interest rates they offer. While you may choose to approach your bank considering your long-standing relationship with it, you may also end up paying more on their used car loan rates. These days, there are a lot of non-banking finance companies (NBFCs) interested in drawing in more customers by offering them competitive loan rates.
Check Added Charges: Your equated monthly instalments (EMIs) do not depend entirely on your loan interest rates. Added costs like processing fees, prepayment expenses, etc. may add to the burden of the EMIs that you have to pay. It is always good to estimate your EMIs with the help of a loan interest calculator given on the site. This is because these calculators’ factor in the additional charges along with the interest rates to lend you a fair idea of the interest due on your loan each month.
Borrow What You Need: Realize the price that you must pay for your used car before deciding on the loan amount. Since used car loan interest rates are a bit on the higher side, it makes sense to limit your loans to the amount that you need to buy your choice of a second-hand car.
Lower Loan Tenure Helps: Most lenders allow you to choose the loan tenure between a year and seven years. While you may opt for the loan tenure depending on your ability to repay the loan, prefer a short loan repayment period. Second-hand car loan interest rates are mostly high, which implies more significant interest outgo in the event of long tenure. Choose to repay your loan quickly to save on the interest component of the loan amount.
Apply Online: Instead of rushing to the nearest branch of your lender, you may apply for the loan online. Making an online application allows you to choose from the varied used car loan rates that your lender offers. The interest rate depends a lot on the loan amount and loan repayment period, thus, allowing you to choose accordingly.
Choose an Organised Dealer: You will find a lot of used cars in the market considering how the automobile market is innovating, thus, giving way to new car models. Prefer to buy used cars from authorised dealers. Authorised car dealers procure used cars, test and repair them before certifying them for their quality. Moreover, they ensure that the car documents are genuine. Financing a vehicle bought from an authorised dealer reduces the risk of accidents, thus, allowing you to benefit from lower used car loan rates. Also, financiers do not mind lowering their used cars loan interest rates on used cars bought from authorised dealers as they come with a warranty ranging from six months to a year.