After getting a good job, every person wishes to live life in a luxurious way. First step to such luxury is to own a car. In fact, with increasing distance between home and offices in metro cities, it has become a necessity rather than luxury. After completion of car driving training, everyone wants to experiment his driving proficiency on a second hand car more willingly than a brand new car. For such purposes, buying a second hand car is a good idea. Also, new models are coming almost every two months. Used cars are great in looks as well as in working condition and also offer an excellent deal for first time buyers.
Nowadays, many banks as well as other NBFC’s are offering second hand car loans. Due to competition, these lenders are ready to provide loans without any delays. Once you get inside their office, you can get finance as early as, 8-10 working days if all the documents are ready.
Features are key determinants in getting a loan
Although getting finance on second hand car is bit tough in comparison to a new car; if car is in good condition, there is no hurdle. According to industry experts, features play vital role in getting loan from the lenders. Used cars with lesser age easily get the loans, as remaining life will decide the worth of that particular vehicle. It also determines the tenure of loan. Many lenders use a simple formula, age of car and offered tenure of loan jointly should not exceed the limit of seven years. For example: if you are going to purchase a car which is 3 years old, then you will get a loan for a tenure of 4 years only. Moreover, normally companies would not finance any car which is 4-5 years old.
Model of car also helps in the valuation. If the car is of older version, then you will get loan of lesser amount and if the model is outdated, then you won’t get loan on such a car. Cars with new versions will fetch more loan amount. For example: Tata Indigo Manza 2011 model with market value of Rs 4.5 lakhs will get a loan of Rs 3.37 lakhs which is around 75 percent of the cost. Generally, financing corporations provide loans up to 60 – 70 percent value of car, maximum upto 75% value. If you have good relation with certain bank, then always apply loans from that bank as they can stretch loan amount up to a limit of 80-90 percent based on relationship.
Secondly, the interest rates applicable on such cars are higher compared to new cars. Normally, interest rate charged on any new car is around 11-14 percent and in used cars, it varies around 14-16 percent, i.e. 3% more than the new cars. Once you apply for a loan, bank will perform valuation of car as per set criteria and accordingly apply the interest rate depending on specific case. Interest rate generally depends on age & model of car, how much distance it has covered and also on condition of its machinery.
Assistance from Professional Dealers
At present, when trading of old cars are rising and range of used cars in the market is increasing, professional dealers have also mushroomed. U trust of Toyota, Maruti True value and Hyundai Advantage are dealers of different companies, which can help you in getting a second hand car as well as the loan. These companies, before putting cars for sale, check and certify them very carefully. They check whether the car has met with any accident in the past, have all the original documents and in a good condition. They sell the cars with a warranty of around six months to one year. Financing companies are aware that the renowned dealers have certified the car. So, they easily provide loans on such cars as there is lesser financial risk attached.