Used cars are an affordable way to practice your hand at driving. Be it for first-timers or auto enthusiasts, these cars are an excellent option to buy your dream car at an affordable price tag. Reports suggest that there are almost twice the number of used cars as compared to new cars that are registered in the country. You can purchase a pre-owned car either through a dealer or directly from a seller. Whatever way you choose, a used car loan is a prudent option to avoid taking a hit on your cash flows. Many lenders that offer used car finance include banks as well as non-banking finance companies. This article enlists some tips on how you can evaluate these offers from lenders to get the best deal. Let’s have a look –
Process of loan approval
Many car dealers have their own finance arm that simplifies the borrowing process. Also, banks are not the only ones that offer finance for a second-hand car. Non-banking finance companies also are a choice to be considered. Some car dealers like Mahindra who have their used car dealership can offer finance for your car in a hassle-free manner if availed from its NBFC arm, Mahindra Finance. Since the process of valuation of the car and its finance rests with the same common group, it speeds up the entire sanction process as well as its sale.
Rate of interest
Since pre-owned cars have certain risks associated with the usage by the previous owner, higher interest rates are charged when compared to new car loans. These used car interest rates are around three to five percent higher than a new car loan. When availing a used car loan eligibility should be kept in mind. It differs among different lenders and thus should be evaluated.
Sanction amount for used car finance
The sanctioned amount for used cars is not the entire amount. It is further lower as compared to a new car loan. Generally, the finance is available only up to 65% to 80% of the asking price. This excludes the cost of registration and other procedural formalities.
Tenure for the loan
When availing used car finance, make sure to evaluate the loan tenure offered by various lenders. Since the cars are already used, some lenders may limit the tenure of the loan. Also, remember that a used car loan has lower tenures when compared to a new car loan.
These are some points based on which you can select your lender. Remember that used car loan rates should not be the only determinant when comparing different alternatives. You should also consider other factors such as tenure, the amount sanctioned and even the loan’s process.