Everything You Need to Know About Used Car Loans in India
You may own a good used car with a used car loan. Used vehicle loans are offered with low interest rates and payback terms of up to 7 years. Some banks offer loans of up to 100% of the car’s value. Most banks and non-bank financial firms give used car loans.
A used car loan in India is offered to self-employed and salaried workers. Notably, if you’re looking for a used car loan in India, there are plenty of options. Yet, as more regulated players enter the used vehicle market, things are getting simpler. So, here’s what you should know about securing a used car loan in India.
7 Things to Consider Before Asking for a Used Car Loan in India
Below are the aspects to consider when seeking a used car loan in India:
1. Gone are the days when buying a used car required you to pay the whole amount in one stroke. You may now fund it totally, just as you would a new car. Many banks and financial firms are now offering used car loans in India, which may be taken directly or via listed banks and NBFCs from a trusted used car seller.
2. Set a budget for your car and look for the relevant options. If you wait long enough, you may be able to purchase your desired car as a new vehicle that was previously out of your price range. When you discover it, physically inspect it for any faults or flaws.
3. Attempt to get an exact appraisal of your chosen car. Knowing the brand, model, and number of kilometres driven, among other things, will help you figure out the correct value of the car, which will be vital when asking for a used car loan in India. While organised entrants will already have a car price, some web platforms include a price calculator. Get the insurance list of cases, which will assist you in determining if there have been any past claims on the car.
4. Once you’ve calculated the car’s worth, pick the choices that best suit your needs. All lenders now want 1% of the automobile’s total cost as a down payment, the same as when buying a new car. While a bank may offer you 100% funding in rare cases, most banks offer loans ranging from 80–85%. In rare cases, it may even be as low as 60%. The rest will be your down payment.
5. The rate of interest (ROI) follows next. Various banking firms will offer varying ROIs on auto loans, which may vary based on vehicle model, credit history, client profile, and other factors. Today, the interest rate on used cars in India is about 11–18% per year, slightly more than the ROI on new cars, which is around 7.5%. Some banks will give a set ROI, while others may offer a fluctuating ROI.
6. The loan term is next. A used car often has a loan duration of 3–4 years, unlike a new car, which may have a term of 5–7 years. This is mostly due to the lower loan sum in the former case. The cost gap between the two might sometimes be more than 50%.
7. A combo of the loan sum, interest rate, and loan term will now decide your equated monthly instalment (EMI). Since the interest rate on a used car in India is higher than on a new car, it’s ideal to pay off the debt as soon as possible. Therefore, pick a shorter term. This will assist in lowering the total interest load. Also, look for a loan option that does not charge an early loan payback fee.
Things to Consider When Getting a Used Car
Some of the most vital factors to consider while buying a used car are as follows:
- Examine The Car
Make certain that the car is fully checked. You may have a mechanic inspect the vehicle. If the car has any problems, you may haggle the price. Drive the car in a less busy area to check for shocks.
- Examine the papers carefully.
It is vital to inspect the insurance paperwork and the registration certificate correctly. Check that the engine and chassis numbers on the vehicle match the ones on the copies. Knowing if the car has been in any accidents is also vital.
- History of the Car
Before buying a car, it is vital to look into its history. You may find the car’s specs online. Checking the car history will help you determine whether the vehicle has been in any accidents or had any servicing problems.
- The registration certificate must be transferred.
Once you’ve bought the car, ensure the registration certificate (RC) is transferred to your name. A NOC is needed if the vehicle is listed in another state. A NOC is also needed if the car was bought on credit by the former owner.
- Insurance Transfer
The automobile insurance plan must be promptly changed to your name. Even though the RC is in your name, the insurance plan is null and void if it is held in the prior owner’s name.
- Maintain the Car
It is crucial that the car be fixed before you begin using it. It must be repaired if it rusts. Before using the car for the first time, replace the lubricants and wash the car.
Conclusion
A used car loan in India may greatly assist you in making your goal of buying a car a reality. Yet, it is vital to examine loan packages from many lenders and pick the best-suited used auto loan for you. While used car loan interest rates in India are higher than new car loan interest rates, your EMIs will be lower since the loan sum will also be lower. If you don’t want to take out a used car loan in India, look at other options for funding a used car. These may include taking out a personal loan, a loan against land, a gold loan, etc.
If you want to know more about 0% car loans in India, visit Piramal Finance. You may also explore their products and services.