Ranvijay Singh owns and runs a gym in Delhi's one of the affluent suburbs. However, his workplace is quite far from where he stays, making his daily commute a hassle. Tired of riding his bike through scorching summer heat and chilly winters, he now wants to get a car. But he does not want to compromise on the brand and model. Ranvijay found a way to get his dream car without stretching his budget; he has decided to purchase a used car. While he is clear about getting a
second-hand car on EMI in Delhi, he has no idea how to go about it. If you too are facing a similar situation, then this article is for you. Today, we will take you through the steps to buying a
second-hand car on EMI. Choose from Different Types of Used-car Sellers in India
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Individual Sellers:
Anyone can be an individual seller—it could be a friend, a relative, or a middleman who assists others in selling their cars. If you are thinking about buying a used car from a private seller, take the time to find out if they are trustworthy. It is a good idea to get a professional mechanic to verify if the second-hand car you are buying has any flaws.
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Car Company:
Car companies, with a showroom for their used cars, are becoming increasingly common these days. Buying a used car from a reputable brand is typically the safest option. When you buy a second-hand car from a company’s showroom, you not only avoid the hassle of paperwork, but you also get a warranty and free service, among other benefits. If you plan to buy a used luxury car, the best option is to get it from a car company. Moreover, most car companies have tie-ups with financial institutions, making it easier to buy a second-hand car on EMI through them.
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Second-hand Car Dealer:
Many people choose to buy second-hand cars from used-car dealers. The advantage of buying from these dealers is that the chances of receiving a faulty car are minimal. You can trust used-car dealers for having thoroughly inspected and tested the cars they sell. In addition, most dealers provide buy here, pay here financing option. You can use them to finance your second-hand car on an EMI basis. However, the interest rates offered by second-hand car dealers are usually higher than those offered by financial institutions.
Now that you have learned about the various ways to buy a used car, it is time to know about the important documents you will need to review before deciding on a car and moving ahead with a second-hand car on EMI.
Also Read: How To Get A Second Hand Car Loan In Delhi-NCR
Documents to Check Before Buying Second-hand Car on EMI
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Car's Registration Certificate (RC):
The registration paper consists of important information regarding the car such as its engine number and chassis number. Before you buy a pre-owned car, make sure the information on the RC matches what is inscribed on the car parts. Also, make sure the paper is not a duplicate RC, and if it is, ask the seller why.
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Insurance Documents:
Before you buy a second-hand car on EMI, ask for the car's insurance papers. Check to see if the previous buyer paid the premiums on time as well as the claim history and policy's expiration date. If you intend to transfer the policy in your name, you should start the process well before the sale.
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Service Book:
Reviewing a service book is one of the most crucial aspects that buyers should consider before purchasing a second-hand car. By checking the service history of the car, you can easily find out the exact condition of the car.
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Road Tax Receipt:
On purchasing a new car, you must pay the one-time road tax at the time of vehicle registration. So, before you buy a used car, check if the previous owner has paid the road tax. If you find that the tax has not been paid on time, you should avoid purchasing the vehicle since it might result in legal issues as well as the payment of a hefty fine that has accrued over time. Road taxes in India usually range from 2% to 18%, depending on the state.
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PUC Certificate:
Driving a car without a Pollution Under Control (PUC) certificate can attract a penalty. Therefore, before you buy a second-hand car on EMI, make sure you obtain the PUC certificate from the previous owner or seller.
How to Buy a Second-hand Car on EMI?
You can apply for a second-hand car loan—both online and offline—with any reputed financial institution. Here’s how you can do it:
Second-hand Car Loan Offline Procedure
- Visit the nearest branch of your preferred lending institution.
- Fill out the application form.
- Submit the photocopy of all the relevant documents.
- Post submission, the financial institution representative will check your eligibility.
- If you are eligible, make sure you discuss the interest rate and loan terms before accepting the offer.
- Once you accept the offer, the amount will be disbursed shortly.
Second-hand Car Loan Online Procedure
- Visit your preferred lending institution’s website.
- Go to the second-hand car loan page and click on the ‘Apply’ tab.
- Fill in your details and submit a softcopy of your KYC documents and income proof.
- Post verification, the lender will make you a personalised offer.
- Once you accept the offer, the second-hand car loan will be disbursed to the seller account.
Different Types of EMI Options for You to Choose From:
When purchasing a
second-hand car on EMI, the financial institution gives you the option of choosing between two EMI methods—standard EMI and structured EMI. Read on to know more about these EMI options.
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Standard EMI:
Under this EMI arrangement, the interest and the monthly obligation remains constant throughout the used-car loan tenure. This EMI option is perfect for you if your income is unlikely to change in the future.
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Structured EMI:
Under this EMI arrangement, the lender gives you the option to customise your pre-owned car loan EMI. If you opt for a structured EMI, your EMI usually starts low and steadily climbs over the loan term. This is the ideal option for those who expect their earnings to rise in the future.
However, before you decide on the EMI option, make sure you know your EMI in advance. You can calculate your EMI using a used-car loan EMI calculator.
Also Read: Tips to Make the Used-car Loan Application Process Easy
How to Calculate Second-hand Car EMI?
There are two ways for calculating used-car EMI. You can either use the mathematical formula, which is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where P means principal loan amount, R means the used-car loan interest rate, and N means second-hand car loan term.
Or, you can just rely on an online second-hand
car loan EMI calculator to do the math. A
car loan calculator uses the same (above-mentioned) mathematical formula for computing the EMI manually.
To Conclude:
Buying a car could be a dream or a necessity for you. Either way, it is important that you get a car you like or you would keep feeling the pinch every time you use it. If your dream car is out of your budget, then going for the used-car option could help you buy the car you like without having to stretch your budget. And, if you buy a second-hand car on EMI, it will further help you manage your funds better.
