Cars today aren't just a luxury item, instead they've become a necessity. This increase in demand for new cars have given rise to the sale of used / pre-owned cars as well. To look at it from another angle learners has a tendency to purchase a used car as their first one, mostly because of the learning curve that we reside in, at that time. But not just that a used car in many ways could work out a better option than their brand new counterparts, difference in price being the biggest factor. And when it comes to making payment for a used-car in one attempt it can be further simplified by simple used car loans. But how do these loans work?
No bank will offer a loan amount equal to the entire cost of the car; the loan amount is generally 90% in new cars and it gets reduced to 70-80% for used cars.
Perks of Pre-Owned/ Used Cars
1. Lower Depreciation
The moment a new car hits the road, it depreciates and its cost goes down immediately. Getting a used car saves you from this. Even the value of used car depreciates, but the money lost is always less than the new car.
2. Huge Variety
Since the cost of the used cars falls down to a price range that is quite affordable, the range and variety to choose from are quite huge.
3. One Can Cross-Shop Between Segments
Cross-shopping between segments is something quite impossible for any new car, but when it comes to a used one, this is quite a trend. For example, you can get a '08 Honda City (NHC) upgraded to '13 Honda Accord 2.4 AT, i.e. two segments higher domain.
4. Possibility of Lateral Upgrades
Lateral upgrades stand for selling and buying used cars for not-so-much money as the original would be. This transaction lets you live with a car that is profusely positive.
Assess a Pre-Owned/ New Car
1. Check Ownership History/ Paperwork
A used car must come with all the required paperwork, this makes you drive your vehicle without any subconscious thoughts of getting caught or doing something illegal.
2. Check Service >2. Check Service & Insurance Historyamp; Insurance History
Everyone knows the value of insurance when the insured thing is something this big. So peek into the history and know the insurance status. This way you would also know if the car has undergone any repairs or has had an accident.
3. Try >3. Try & Buy a Certified Caramp; Buy a Certified Car
Buying a certified car keeps you away from frauds. The dealerships that provide certified used cars make the car go through a detailed checkup. This check not only reveals any defect but also the parts that are worn-out. The certified cars are a little expensive but worth the cost.
4. Check The Reliability Ratings
Reliability and popularity might not go hand in hand, but you should definitely check the reliability ratings of the car that you wish to buy (both the ratings must be checked i.e. new as well as old).
5. The Newer/Lesser Run, The Better
A car that is old enough but has not been on the road much should be usually avoided, as this might cause several problems for you in the long run.
Financing a Pre-Owned/Used Car, Points to Know
1. Loan Amount - As already mentioned, the car loan amount can range from 90% for new cars to 70-80% for the used cars.
2. Interest Rate - Car loans are one of the most expensive loans in the market. You can get a new car loan at 9.2-9.25% from government banks, but the same can shoot to 12.65% for a used car. Some private banks might offer a car loan at an interest rate of 11-12% for a new car and 14.5-16.25% for a used one.
3. Vehicle Age - The terms and conditions of car loans vary with the vehicle age. This is because after the vehicle reaches a certain age, banks decline loan requests. Hence, you must be aware of these policies.
4. Loan Tenure - The age of the vehicle affects the tenure of the loan. You can get tenure of 8 years from some government banks for a new car, however, this goes down to 3 years if you buy a used one.
Eligibility & Document Requirements
You will need at least the following documents for this loan to be approved.
- Identity proof
- Address proof
- Income proof
- Vehicle registration & insurance papers
So when are you getting the #Wheels of your #Dreams..?
