November 4, 2021
  • November 4, 2021

Take a used car loan? Check these things out before

By on July 22, 2021 0

Take a used car loan? Check these items before

New Delhi: In recent times, the demand for used vehicles has increased as many people avoid public transport in order to protect themselves from infection. Those who don’t have their own vehicle mostly buy entry-level cars to get to work. But those with budget constraints opt for used cars.

Another reason people want to buy a used car is that they only want the vehicle for a limited time until the pandemic is over. Used cars can be purchased at a lower investment of at least 10-15% compared to new cars. If you are planning to buy a used car, there are some crucial things to consider.

1. Selection of vehicle type, make and model: The first thing you need to categorize is the type of car you want to buy. If you are buying a used car for the first time, an entry level car would be a good choice for you, especially if you are on a tight budget. You can start with an entry-level car and gradually upgrade to a larger car in the future at your convenience. Try to stick to an appropriate range, including the purchase price and the annual maintenance cost.

2. Comparison: Nowadays there are several online platforms that allow you to compare cars within your budget to get a good deal. Keep a close eye on the age and condition of the car you are looking to buy, as banks may not be willing to give a loan if the vehicle is over 2-3 years old. Several other factors like number of kilometers driven, user profile, location of use, accidents or modifications to the vehicle, etc., should also be checked as they can affect loan eligibility and insurance. You should also request the service history.

3. Offers and good deals: Once you’ve decided on the car you want to buy, find a lender who can help you finance your used vehicle at the best rate. Companies that sell used vehicles sometimes have partnerships with various FinTech companies, NBFCs, and banks to help buyers get financing quickly. Before you focus on a loan offer, compare the interest rates offered by different lenders to see if they offer a fixed or variable interest rate.

Banks charge 3-7% higher interest on used cars compared to new cars because of the higher risk they take in financing a used car. Currently, used car loan rates start from 10%, while new car loan rates start much lower at 7.5%. Lenders can also charge a processing fee, which can vary between 1% and 3% of the value of the car. “

4. Other loan options: Financial planners say look for other options to finance a used car rather than taking out a used car loan, as banks typically finance up to 60% of the car’s value and charge also higher interest. In such a situation, if you have a home loan, you can take out a top-up loan to finance your car purchase as these loans are available at an interest rate that can be up to 60 basis points higher than your loan. real estate and you get a longer repayment period.

The second option that can be used to finance a car loan is to take out a gold loan as these loans are available at an interest rate starting at 8.80% and there is no repayment restriction. As the price of gold is now at an all time high, one can easily get a loan of Rs 3.5 lakh by mortgaging 100g gold jewelry. If these two options are not suitable for you, you can opt for a personal loan to finance your purchase.

It should be added that you need to check all the required documents such as car registration certificate (RC), insurance, certificate of no objection (NOC) and certificate of pollution under control (PUC) before finalizing the purchase. You will also need Forms 29 and 30 which work together to notify the Regional Transportation Office (RTO) that ownership of the vehicle has been transferred.

Also make sure that you have transferred the seller’s insurance policy to your name immediately after purchasing the car.

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