Our commute habits have been completely altered by the COVID-19 outbreak. People have been compelled to rely less on public transportation options, such as buses, cars, local trains, and taxis, due to coronavirus fear and social distance rules. As a result, a sizable portion of the populace seeks to acquire a vehicle.
During the early stages of the epidemic, there was significant demand for brand-new automobiles and two-wheelers. Standard two-wheelers and tiny hatchback automobiles were the most in-demand because of their affordability. Compared to the same quarter last year, sales of cars increased by 320% and of two-wheelers by more than 85% in the first quarter of the fiscal year 2021–22, respectively.
But not everyone in India can afford a brand-new motorcycle or automobile. Although demand for personal mobility is at an all-time high, many consumers have been unable to afford such pricey purchases due to the ongoing economic unrest. This has led to the development of several additional ideas that can offer the advantages of car ownership, albeit at lower costs. One such thing is “used car loans.”
The least expensive way to acquire an automobile is to purchase a used or pre-owned vehicle. Those who are unable to buy a new car can still acquire their preferred vehicle by making substantially smaller payments, however, used car finance rates are comparatively higher. You may get a secondhand vehicle that is five years old for roughly 40 to 50 percent of its invoice value.
Some Points To Think About Before Getting A Used Car Loan
A secondhand car might get you places, but it will cost you more in interest and have a shorter lifespan. But there are other factors to take into account as well when choosing to purchase a used car through used car loans.
1. High Interest Rate
Due to the higher risk involved, used car finance rates are higher than loans for new cars. A used car does not have the manufacturer’s warranty that new cars do, which covers both the vehicle and its parts. The condition of the car, the frequency of accidents that may have occurred, the state of the components and the engine, and other issues are all unclear. Therefore, it is viewed as a disadvantage. Additionally, the financier also perceives the profile as significantly riskier.
2. Age and Car Type
When applying for a used automobile loan, factors including the kind and age of the car are important. For instance, a car’s lifespan is typically estimated to be 15 years.
3. Car’s Registration Certificate
Make sure that the car’s registration certificate is free of any hypothecations to banks or other lending organizations. If it is not done, it indicates that the car was obtained on credit and that credit may still be available. Before listing the car for sale, the seller must have the hypothecation withdrawn from the registration certificate and obtain a new registration certificate in his/her name from the regional transport office (RTO).
4. Check All Car Related Papers Thoroughly
Thoroughly inspect all documentation, especially the insurance and registration certificate. Additionally, verify the engine and chassis numbers on the car and compare them to the ones on the registration document. Check to see if the car has ever been in an accident and for any service issues.
Budget constraints are one of the reasons people search for used cars. “There is economic instability. Although purchasers demand cars, their budgets are constrained. Because of this, many people choose secondhand vehicles over brand-new ones. You can also avail of used car loans to purchase a pre-owned car
However, financing your purchase of a used automobile might be perplexing because the interest rates are significantly higher (by 3-7%) than those that lenders give on new cars and because each lender has a distinct set of requirements. However, used car finance rates are higher than loans for new autos. Hence, one must consider several factors before opting for a used car loan.