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5 Things To Know Before Borrowing A Loan To Buy A Second Hand Car
One of the main reasons why one buys a car is convenience. The other reason could be the car’s aspirational value. Owning a car is no longer a luxury but a necessity, especially in urban areas. You might need a pre-owned car to practice on if you are a new driver, add a second family car, have budget constraints for a new one or simply to upgrade from a two-wheeler. Thankfully, the pre-owned car market has seen a major overhaul in recent times. Both banks and NBFCs offer used car loans, some with even zero down payment options. Not only pre-owned cars, but loans are also available for commercial vehicles.
Things to Consider When Buying a Second-Hand Car
A solid verification of condition of the pre-owned car, make and model, and other details about the vehicle ensure you a smooth ride with your dream car.
Some of the important things that you must do when you buy a used car are mentioned below:
Car Condition: Taking the help of a knowledgeable person like a mechanic is highly advisable to check the condition of the car, both exterior, and interior. And do not forget to take a test drive to get a feel of the car on the road.
Vehicle Documents: It is important to verify the documents related to the car like the registration certificate, insurance papers, previous car loan papers, Pollution Under Control certificate, etc. Do cross-check that the engine and chassis numbers match the ones on the vehicle papers.
Vehicle History: The car insurance companies would be able to give details if the car has had any accidents in the past. Also, make sure to through the car servicing records to ensure that the car has been maintained well.
Transfer of Vehicle Documents: Once you have purchased the car, you are legally bound to get the Registration Certificate and Car Insurance transferred to your name.
Hypothecation: If the previous owner had taken a loan on the car, make sure it has been repaid. Also, ensure that the hypothecation to the previous lender has been removed.
Features and Benefits of a Used Car Loan
Availing of a second-hand car loan is an economical and viable option to finance your dream pre-owned car. Here are some of the features and benefits of a used car loan:
The loan amount will be lesser than for a new car of the same make and model. Thus, your monthly EMIs will be less.
Easy comparison of your car loan eligibility, offers, and interest rates on the second-hand car.
The application process is quick and simple. Most lenders allow online applications.
Minimal documentation, quick approvals, and quick disbursals.
The insurance costs and depreciation rates are lower when compared to a new car.
Some lenders offer zero-down payments, up to 100% financing schemes.
Long repayment tenure with flexible repayment terms from certain lenders.
5 Things To Know Before Borrowing A Loan To Buy A Second-Hand Car
The easy availability of second-hand car loans has made it possible for many to enjoy a second-hand car, that too, on EMI. But before you decide to purchase a used car on EMI, do consider these important aspects:
Allocation of Budget: The possibility of owning a high-end car at a discounted price is a lucrative proposition. But would you be able to service the EMI on such a used car? This is the question to ask yourself.
Used Car Loan Eligibility: The eligibility for a used car loan could vary from lender to lender. It could also differ for salaried and self-employed individuals. But the basic criteria remain- Age, Income, Work Experience, Credit Score, and Age of the vehicle.
Interest Rates: The interest rates on second-hand cars can vary with lenders. The rate of interest on used car loans is generally higher compared to those on new cars, because of the higher associated risk. A second-hand car loan can have fixed or floating rate interest. In a fixed interest rate used car loan, the EMI is calculated basis the fixed interest rate. In a floating interest rate used car loan, the interest rates keep fluctuating depending on market conditions.
Type and Age of the Car: The eligibility criteria of a second hand car loan and subsequent sanctioned loan amount also depend on the type and age of the car. Some lenders require that the vehicle bought should not be more than 10 years old by the time of loan maturity.
Alternative Ways of Financing: A used car loan could be a lengthy process as lenders have to check loan and hypothecation status if any, accidental history, pending police cases if any, etc. However, if you have a good credit score, you could take a personal loan to buy a pre-owned car. A gold loan is also a great option for financing if you do not have a good credit score.
To get the best value on a second-hand car loan, do not forget to research and compare eligibility, interest rates, and offers from different lenders.
Own Your Dream Car With Muthoot Finance
Muthoot Finance turns your dream of owning a pre-loved car into a reality. They provide instant loans for both private and commercial vehicles. It offers up to 95% financing, competitive interest rates, and flexible repayment options. Your desire for a pre-owned car is just a click away!
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